Sitting of 9 May 2000

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS

    CITY OF NEWCASTLE-UPON-TYNE BILL [LORDS] (BY ORDER)
    Order for Third Reading read.
    To be read the Third time on Tuesday 16 May.

    GREENHAM AND CROOKHAM COMMONS BILL (BY ORDER)
    Order for Second Reading read.
    To be read a Second time on Tuesday 16 May.

Oral Answers to Questions
  ENVIRONMENT, TRANSPORT AND THE REGIONS
  The Secretary of State was asked—
  ENVIRONMENT, TRANSPORT AND THE REGIONS

    Small-scale Enterprise (Rural Areas)
    Mr. Bob Blizzard: If he will revise planning guidance to encourage small-scale enterprise in rural areas. [120139]
    The Minister for the Environment (Mr. Michael Meacher): National planning policy guidance already encourages local planning authorities to plan positively for small-scale enterprises in rural areas. In preparing the rural White Paper, we are considering whether that guidance might be strengthened or clarified, consistent with the principles of sustainable development.
    Mr. Blizzard: I thank my right hon. Friend for that answer. If we want a prosperous and sustainable countryside, there must be more opportunities for people to work there, rather than having to go off to towns and cities to work. If farmers are to diversify successfully, as we wish them to do under the rural development programme and rural enterprise schemes, planning guidance must encourage that, and not stand in the way.
    Will my right hon. Friend visit St. Peter's brewery in my constituency? It is an outstanding example of rural enterprise, which produces an excellent product and is at one with its rural setting. However, when it was first established, it was in the face of planning, and not encouraged by planning. That example is an instance of
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    Conservative policy, which seeks to preserve a picture postcard time-warp version of the countryside and does not promote a modern, working countryside.
    Mr. Meacher: I am always willing to consider visiting my hon. Friends' constituencies—especially those that contain breweries. The performance and innovation unit report on rural areas suggested that planning was a barrier to diversification. However, analysis of responses to that report shows that some local planning authorities need better to interpret and implement national planning policies to encourage development to meet local needs. However, we are examining the matter and my hon. Friend the Minister for Housing and Planning is holding a seminar at the end of the month, which local stakeholders will attend, to see how the planning system can be improved to further assist farm diversification.
    Mr. Elfyn Llwyd: The right hon. Gentleman referred to sustainable development. I am sure that greater clarity is needed in the planning process. As the hon. Member for Waveney (Mr. Blizzard) said, there is now a crisis in agriculture and in rural areas generally. I therefore urge the right hon. Gentleman to make it clear to planning authorities that there should be a presumption in favour of sustainable small and medium-sized developments.
    Mr. Meacher: I am pleased to give that assurance. Policy planning guidance note 7 already gives strong encouragement to local planning authorities to provide for commercial development in their development plans, noting that many commercial and light manufacturing activities are acceptable in rural areas. The note encourages the reuse and adaptation of rural buildings and allows authorities to discriminate in favour of commercial—as opposed to residential—use. Such matters will certainly be raised in the seminar that I mentioned and the Government wish to take the matter further.
    Mr. Hilton Dawson: I urge my right hon. Friend to give the strongest possible lead to local authorities on implementing sustainable employment schemes in rural areas. As he knows, some of us represent rural constituencies that were massively neglected by the previous Administration and rural Conservative Members for decades. The legacy of poverty, isolation and despair is something to behold and the Government need to act.
    Mr. Meacher: We are introducing a rural White Paper soon—later this year—because we realise that rural regeneration, the breakdown of services, social exclusion and rural governance are all problems that were allowed to deteriorate badly under the Conservative Administrations of the past two decades. We believe that the White Paper will redress those problems in a visionary and practical way.
    Mr. Damian Green: Can the right hon. Gentleman confirm that, in promoting business, he does not really care whether greenfields are destroyed?

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    Yesterday, the Daily Express said that, in pursuing development, the Deputy Prime Minister thinks that
    greenfield—and even Green Belt—sites could have to be sacrificed
    and that
    There is no point in waxing lyrical about a green and pleasant land.
    Will he confirm that report? Does he agree that there is certainly no point doing so under the current Government? The only joined-up part of their environment policy is the sea of concrete that they want to pour over the green fields of England.
    Mr. Meacher: The hon. Gentleman should not believe all that he reads in newspapers. Let me make it clear that, under the Labour Government, the area of green belt has extended considerably, and building on green belt, which was so noticeable under the previous Administration, has finally been reversed.

    New Houses (South-east)
    Mr. Howard Flight (Arundel and South Downs): If he will make a statement on the proportion of brownfield and greenfield land to be used to build new houses in the south-east. [120140]
    The Minister for Housing and Planning (Mr. Nick Raynsford): My right hon. Friend the Secretary of State has already made his position clear in his proposed changes to draft regional planning guidance—RPG9. He expects that London will continue to achieve more than 80 per cent. of residential development on previously developed land and he proposes that local authorities in the south-east outside London should seek to achieve at least 60 per cent. of all new housing development on previously developed land.
    Mr. Flight: Will the Minister reconsider the Government's figures for West Sussex, which he will be aware cannot be achieved other than on the basis of 60 per cent. greenfield and 40 per cent brownfield, because there is insufficient brownfield land available?
    Mr. Raynsford: No, the hon. Gentleman is wrong. I shall remind him of the figures. Under the existing structure plan—the one that is in force, not the new arrangements—the provision in West Sussex as estimated by the south-east regional planning committee, Serplan, is 3,212 homes per year on average, compared with illustrative figures that we sent out to the chairman of Serplan a couple of weeks ago of 2,930 homes per year. There is no question that we shall impose an unreasonable additional burden on West Sussex—that simply is not true and it is wrong to pretend that it is.
    Alan Whitehead: Does my hon. Friend agree that, especially in the south-east, affordability is a key issue in planning future housing development? Does he also agree that a region having housing stock that is out of reach of most of the people living in that region is bad for the future of those people?
    Mr. Raynsford: My hon. Friend makes an extremely valid point, which is why, in PPG3, the Government placed strong emphasis on making mixed developments,
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    containing an appropriate balance of affordable housing, an important element of new development where necessary throughout the country. We shall continue to pursue that policy to ensure that all sections of the community have the opportunity to obtain a decent home.
    Mr. James Clappison: Is the Minister aware that almost all the land outside urban settlements in my constituency is covered by an existing green belt designation? My constituents derive no comfort from the philosophy expounded by his colleagues, that building on existing green belt can be made up by redesignating green belt elsewhere. Will not that sort of thinking lead to the whole of the south-east, especially the areas just outside London, being concreted over?
    Mr. Raynsford: No. As a former Minister, the hon. Gentleman will acknowledge the importance of the evidence, which clearly shows that the Government's target of 60 per cent. of new housing development in the south-east being on brownfield sites can be met. Those figures are confirmed by the national land use database figures, which show that the south-east contains 5,460 hectares of empty brownfield land that is suitable for housing development. It is important that development focuses on brownfield sites, and the Government are absolutely clear about their commitment to achieving that.

    Rough Sleepers
    Laura Moffatt: If he will make a statement on progress made in reducing the number of rough sleepers. [120141]
    Fiona Mactaggart: If he will make a statement on progress made in providing services to rough sleepers. [120147]
    The Minister for Local Government and the Regions (Ms Hilary Armstrong): We are implementing the proposals in our national strategy "Coming in from the Cold". I am pleased to announce that I have agreed the final step required to ensure that there are enough hostel beds for vulnerable rough sleepers in London. We will spend £9.6 million on 150 hostel beds, which will bring the total to the target set out in the strategy. In December, we met our first milestone of reducing the number of rough sleepers by one tenth. January street counts showed that there had been a fall of around one third in the number of people sleeping rough in central London since June 1998.
    Laura Moffatt: That is most welcome news, but I would like to take the argument a little further. Clearly, there is now a commitment to deal with rough sleeping. Does my right hon. Friend agree that the most important part of the new package is to ensure that rough sleepers do not return to the streets? Does she also agree that we should share the good practice of many local authorities in and around London, such as short-term accommodation for the young—STAY—in Crawley and the foyer projects of local government, the London and Quadrant housing

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    trust and the Housing Corporation, which give young people stability and ensure that they do not return to the streets?
    Ms Armstrong: My hon. Friend is right; it is very important that we do more, both to prevent people needing to end up on the streets and to ensure that, once we get them inside having slept rough, we sustain their ability to remain in stable accommodation and work with them consistently. Projects such as the ones that she described in Crawley are exactly those that we are seeking to develop throughout the country, so that people recognise that coming to London does not mean pavements covered in gold, and they are able to find a settled life in their home area.
    Fiona Mactaggart: I was very pleased to welcome the Minister to Slough to open a practical project at the Look Ahead hostel, offering 18 places, to reduce the number of rough sleepers in our town. It is clear from speaking to its residents that crucial to improving services for rough sleepers is the quality of health care that they receive. Many have had problems with drug and alcohol abuse, and if health services and GPs do not provide them with care, they are likely to return to the streets. Will my right hon. Friend discuss with the Department of Health ways in which it can work with housing projects to improve health care for rough sleepers and former rough sleepers to keep them off the streets?
    Ms Armstrong: I was delighted to visit and open the Serena Hall hostel in Slough last week. It is another good example of co-operation between central and local government and the Housing Corporation to ensure appropriate services. We know that many people end up sleeping rough because they abuse drugs or alcohol, but that the necessary services have simply not been available at the time and in the place that they needed them. I assure my hon. Friend that we are already working very closely with the Department of Health. We are joining funds in order to establish contact and assessment teams to pick up people who have specific problems, and to ensure that they come inside and receive appropriate services. Mental and physical health and the tackling of drug and alcohol abuse are central to the strategy.
    Mr. James Gray: Will the Minister take this opportunity to pay tribute to my right hon. Friend the Member for North-West Hampshire (Sir G. Young) who, when he was Housing Minister, launched the rough sleepers initiative, which was so successful under the previous Government? In working out how successful the RSI has been, does she agree that it is important to compare winter figures with winter figures and summer figures with summer figures?
    Unlike the figures that the Minister quoted, the reality is that, in June 1998, there were 620 rough sleepers in London, but by June 1999 that number had increased to 635. If one compares winter figures with winter figures, one also finds an increase in the number of rough sleepers in London that is quite contrary to the spin that the Minister put on it. Is she not concerned that the decline in investment in social housing under this Government is
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    causing a net increase in homelessness—unless one has the good fortune to be provided with a subsidised house by the RMT?
    Ms Armstrong: I am sorry to disappoint the hon. Gentleman, but the figures that I gave demonstrate a reduction not only since we began the strategy, but year on year from January to January. I am really sorry that he is not full-heartedly behind the policy. The problem with the previous Government's policy was that about £250 million was spent and much new accommodation provided, but there was no reduction in the number of people sleeping rough. Our strategy builds on what the previous Government did, but goes much further. We believe that it is not necessary for people to live on the streets, and we will make sure that they do not.

    New Deal for Communities
    Mr. Bob Laxton: If he will make a statement on the progress of the new deal for communities. [120142]
    The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott): Seventeen new deal for communities pathfinder partnerships have already received offers of long-term support of more than £770 million to help them implement strategies for real change. That funding will help communities tackle interconnected problems, such as unemployment, crime, educational under-achievement and poor health, in a fully integrated and joined-up way. A second round of 22 areas across England, including Derby, have submitted their proposals for achieving long-term sustainable regeneration.
    Mr. Laxton: I thank my right hon. Friend for that reply. He referred to the bid from my constituency, Derby, North. May I stress the need for the bid to go through smoothly? Can my right hon. Friend assure me that the decision on that will be taken on 22 May? To illustrate the strength of the bid, may I read two quick paragraphs from a vision statement—
    Hon. Members: No.
    Madam Speaker: Order. This is Question Time. The hon. Gentleman should save that for an Adjournment debate.
    Mr. Prescott: As my hon. Friend said, Derby is one of the new areas under consideration. It is clear that a number of areas in Derby are greatly in need of such a programme. We will make the decision as quickly as we can.
    Mr. Archie Norman: Can the Deputy Prime Minister say how much less the Government spent on urban regeneration last year than was spent in the last year of the previous Government?
    Mr. Prescott: At well over £2.5 billion, our regeneration programme is considerably more substantial in its direction and concentration in regeneration areas and developments.
    Mr. Norman: The Deputy Prime Minister has again failed to answer the most basic question. May I commend

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    to him for bedtime reading his Department's own annual report, which states that £1.4 billion was spent last year on regeneration programmes, as against £17 million less under the previous Conservative Government? Does he accept that, whatever the good intentions, and for all the repeated announcements and reheating of old rhetoric, the new deal for communities has been treacly slow to get off the ground? Does he agree that the local election results last week in London, Hartlepool, the midlands and many other urban areas were a clear verdict on Labour's failure to deliver for its urban heartlands?
    Mr. Prescott: When the hon. Gentleman has been in the House a little longer, he will understand the kind of problems that we inherited from the previous Administration. In the areas that we have identified to be new deal communities, the mortality rate is 30 per cent. higher than the average, and levels of unemployment, burglary and other problems associated with new deal areas are considerably higher. We have developed selected programmes in health, education and tackling crime, all to be added to the regeneration programme, in addition to the £800 million that has been designated for the new deal areas. That is the scale of resources that we are directing at those problems, and it is much greater than under the previous Administration.
    The amount of money going into social housing was mentioned earlier. The Government put £5 billion of capital receipts from the sale of council houses into improving housing in those areas. Money on that scale was kept back by the Tories, who preferred to keep the interest payments rather than improve houses.
    Mr. Hilary Benn: May I draw my right hon. Friend's attention to the powerful film by Fergal Keane, which was shown on BBC television last night and dealt with the Lincoln Green estate in my constituency? I am glad to say that, since the film was shot, a start has been made on regenerating that area. Will my right hon. Friend join me in congratulating all the people in the area who are working to make it a better place to live? Incidentally, there was a swing to Labour in the local elections there last Thursday. Does my right hon. Friend agree that that is precisely the kind of estate that could benefit from new deal for community funding?
    Mr. Prescott: I quite agree. My hon. Friend has drawn attention to the key point of community involvement in the schemes. They are not simply about councils getting together, but are about the community's active involvement and different Departments joining up to ensure that the schemes are directed positively. All the schemes show a willingness to innovate and a long-term commitment to deliver. We have adopted precisely that strategy, and it fits the example that my hon. Friend cited.
    Miss Anne McIntosh: Does the Deputy Prime Minister agree that the new deal has been a poor deal for constituencies such as the Vale of York, and that it has failed dismally to help the young unemployed or communities? The Deputy Prime Minister should focus the Government's attention on processing applications for state aid for pig farmers and for Rover. That would help industry much more than his four schemes.
    Mr. Prescott: I think that the hon. Lady has mixed up several schemes. We are considering the new deal for
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    communities, whereas she referred to the new deal on unemployment. The scheme that she mentions is working. As we promised, we are getting more and more people back to work, and there has been a 70 per cent. reduction in youth unemployment; that is an important achievement.
    The hon. Lady also mentioned farming and Rover. We shall hear a statement on the latter shortly. I simply point out that the previous Government sold Rover for £1 and left us with all the problems.

    Homelessness
    Mr. Patrick Hall: If he will make a statement on progress made in combating homelessness. [120143]
    The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin): Shortly after taking office, the Government introduced secondary legislation to strengthen the safety net for households accepted as statutorily homeless and ensure that they were given reasonable preference in the allocation of permanent local authority housing. The housing Green Paper, which was published on 4 April, includes proposals to fulfil the Government's election manifesto promise to place a new duty on local authorities to protect those who are homeless through no fault of their own, and whose needs are a priority.
    Mr. Hall: I thank my hon. Friend for his answer. I welcome the proposals in the Green Paper and look forward to their development in the Bill. Will my hon. Friend consider taking further the steps that the Green Paper outlines by placing a duty on local councils to prepare and publish comprehensive strategies to prevent homelessness? That would be the best way forward. I understand that the homelessness taskforce in Scotland has made such a proposal. Will my hon. Friend consider extending it to England and Wales?
    Mr. Mullin: There is a strong emphasis in the Green Paper on preventative work. We should like local authorities, in partnership with the voluntary sector, to take a more strategic approach to tackling the causes of homelessness and preventing their recurrence. The housing Green Paper includes a proposal to require local authorities to carry out an audit of all forms of homelessness in their areas and the provisions for dealing with it. They will be required to consult locally on their findings and the steps that they propose for dealing with any problems. They will also be required to incorporate their findings and proposed actions in their housing strategy. The Green Paper is a consultative document, and we shall consider carefully the responses to it.
    Mr. Nigel Evans: On Sunday evening, I walked past nine people sleeping rough outside the Army and Navy store in Victoria street. Clearly, the Government's action is deficient. What further action and incentives can the Government introduce to ensure that extra places are made available for those who sleep rough in London?
    Mr. Mullin: More beds are available for the homeless in central London now than at any time in the past. [Interruption.] The hon. Gentleman is right. People slept

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    rough under Tory Governments and people sleep rough under Labour Governments, but we are trying to do something about it. We are doing a darn sight more than the previous Government.

    Beacon Councils Scheme
    Mr. Jim Cunningham: If he will make a statement on the progress of the beacon councils scheme. [120144]
    The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Beverley Hughes): The scheme is making excellent progress. More than 1,500 delegates have already attended roadshows to learn from beacon best practice. We have also announced 11 new themes for the second year, all of which involve council services that directly affect people's lives and the communities in which they live.
    Mr. Cunningham: Will my hon. Friend commend Coventry city council for achieving beacon status? It was one of six councils to do so, out of about 90 applicants. Will she also commend the Coventry partnership for achieving a 44 per cent. reduction in crime overall and a 25 per cent. reduction in retail crime? Does she agree that that is a tremendous achievement and a pointer in the right direction for the Government's policies?
    Ms Hughes: Yes; we were pleased to be able to award beacon status to Coventry city council last year. That reflected its excellence in preventing local shopping and town-centre crime and disorder and its overall good performance, to which my hon. Friend alluded. The particular strength was its partnership with the police and local business. As well as achieving the reductions that he mentions, it has led to greater use of shops and car parks in the city centre and has therefore had a beneficial effect on shoppers and local businesses.
    Mr. Tony Baldry: With so many councils now back under Conservative control, will the Minister set out objectively and transparently the criteria used to select beacon councils and beacon schemes so that there can be no scintilla of a suggestion of political partiality in their selection?
    Ms Hughes: We shall have to see what the implications are for the overall performance standards of those councils that have changed to Conservative control. The record of Tory authorities on performance in local services is not good. The hon. Gentleman will have read the prospectus on beacon status schemes, so he will know that an advisory panel applies clear and rigorous criteria in judging the many applications from across the political spectrum. He will also know that councils controlled by all political parties were awarded beacon status in the first phase of the scheme.
    Mr. Lindsay Hoyle: Will my hon. Friend ensure that there will be incentives for district councils, not just the metropolitan and unitary authorities, to apply for beacon status?
    Ms Hughes: Certainly. There is now a list of 11 themes for the second year of the beacon councils scheme,
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    including a wide range of services that are important to local people. Many are delivered at district level. We have tried to ensure that the scheme includes the services that county councils deliver so that they can participate. It also includes cross-cutting themes so that we can encourage those councils that are making good progress in integrating their services across several departmental areas. As in the first phase, I am sure that councils will be tremendously interested in applying for beacon status.

    Road Improvements
    Mr. Ian Bruce: What progress has been made towards completing the schemes in the targeted programme of road improvements. [120145]
    The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott): My noble Friend Lord Whitty confirmed on 3 February that we would let contracts for 13 of the 37 schemes this year. The Government have provided an additional £25 million in the Budget to enable contract awards for six schemes to be brought forward. We have announced the addition of four schemes to the programme. Government policy on roads is no longer based on the old system of predict and build; it is based on the new approach to appraisal, against the five criteria of environmental impact, safety, economy, accessibility and integration.
    Mr. Bruce: I thank the right hon. Gentleman for that answer. He will know that the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Streatham (Mr. Hill), is coming to view the Dorchester relief road, which is in my constituency, on 13 July. He will also know that that scheme was ready to be built when the Government came to power and that they have become unpopular by cutting road schemes. May I urge him, in a spirit of cross-party support, to come to the aid of the Weymouth and Portland Labour party, which lost so heavily, and the Liberal Democrats, who control the county council and lost even more heavily in my constituency, and award them that scheme, which will be universally welcomed by all political parties?
    Mr. Prescott: The hon. Gentleman was doing quite well in impressing me until the second part of his question. His criticisms about cutting road programmes should be directed to the previous Conservative Government. The 500 road schemes decided in 1990 represented a wish list, because 60 per cent. of them had not seen the light of day before the previous Government left office.
    The great majority—236—had been cancelled, along with other programmes.
    The hon. Member for Tunbridge Wells (Mr. Norman) should be aware of the situation. As he has said a number of times in the House, he has waited 11 years for improvements to the A21. I am pleased to tell him that the Government have now agreed to the implementation of the Lamberhurst bypass scheme.
    Mr. Ben Bradshaw: Devon county council, which is run by the Liberal Democrats, underspent by £1.4 million on its roads maintenance budget last year, despite the appalling condition of the roads in my constituency. I fell off my bike recently, having hit one

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    of the many potholes that are the result of the council's incompetence. Is that not another argument for the Deputy Prime Minister to give Exeter city council—another beacon council, Labour run—control of its own affairs, and the unitary status that it so desperately needs?
    Mr. Prescott: I agree with a great deal of what my hon. Friend has said. This is really about road programmes. I should apologise to the hon. Member for South Dorset (Mr. Bruce): the Weymouth relief road is a local road, the improvement is among those that we are considering, and we have talked to the local authority about it. We are not too happy about the scheme that they have presented, but we are discussing how they might present it in a way more acceptable to us.
    Mr. Bernard Jenkin: How can the Deputy Prime Minister say that he really cares about our crumbling road infrastructure and keep a straight face, given that he is spending less than the Conservative Government on road maintenance? Will he confirm figures that I have obtained from the House of Commons Library, which reveal that he is not only spending less than the average spent by the previous Government on road maintenance, but spending less on transport in total—less on local transport grants and credit approvals, less on infrastructure improvements and trunk roads on motorways, less on London Transport and less on support for the railways? When will he admit that the only programme on which he is spending more—an extra £100 million—is that represented by the running costs of his own Department? How is he to improve the transport infrastructure if he continues to lose all his battles with the Treasury?
    Is it not the case that, as the Government tax motorists £36 billion a year—£1 in every £7 that they spend comes from the motorist—the Deputy Prime Minister is delivering less and less? Is that not why we say that his Government tax more and deliver less?
    Mr. Prescott: The hon. Gentleman's rant is just not true. The resources that we have provided for maintenance are a considerable increase on what was provided by the previous Administration. We have spent £2.8 billion on trunk road maintenance; the previous Administration cut road maintenance spending considerably.
    As for the overall figures, because in our first two years of government we decided to accept the expenditures laid down by the previous Government in their Red Book, they may seem lower. Our priority is finding a way in which to begin to improve public transport, while also giving greater priority to road maintenance. We are doing that, and it is beginning to have an effect.
    I will take no criticism of the state of our roads from those who supported the previous Administration, who spent 18 years in government. The roads are in the worst possible state because of a lack of investment over the past 10 or 15 years.
    Mr. Michael Jabez Foster: Given the encouraging progress on the roads programme to which my right hon. Friend referred, and the fact that the A21 is at the forefront of his mind, may I ask him
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    whether, if—as is assumed—the access to Hastings study will result in a yes later this summer, the scheme will get somewhere in the next few years?
    Mr. Prescott: As we said in our paper on the roads programme, the 37 schemes that we identified are to go ahead; the others were passed to local authorities to consider in their transport plans. As I said to the hon. Member for South Dorset, some are to be dealt with in that way. We will give them the order of priority, and exercise the criteria, laid down in our paper.

    Local Authority Funding
    Mr. Steve Webb: When he expects to bring forward proposals for the reform of the system of allocating funds to local authorities by reference to standard spending assessments. [120146]
    The Minister for Local Government and the Regions (Ms Hilary Armstrong): Decisions about the merits of the various options for reform will not be taken until we have consulted widely this summer.
    Mr. Webb: Does the Minister accept that, for my constituents in South Gloucestershire, SSA might as well stand for "schools short-changed again", because for as long the council has existed, it has been the worst-funded local education authority in the country in terms of primary schools? Does she accept that my constituents will be angry if a whole Parliament goes by without reform of that unfair scheme? Will she tell them today that, before the current Parliament is through, we will have a fairer scheme in place?
    Ms Armstrong: As I am sure the hon. Gentleman knows from previous Question Times, I am keen for us to move to a new form of funding, but that requires co-operation from local government, as well as ideas and determination from central Government. We have a system that I support, which recognises that different parts of the country need different levels of support from central Government. We believe that we should respond to need, and it is from that basis that we start.
    I hope that we can move forward, but there is no holy grail. What is important in one area has a different priority in another. What is seen as fair in one authority is seen in very different ways in others. I am sure that constituents of other hon. Members will feel that they have as much right as any of the hon. Gentleman's constituents to get an uplift. We will do what we can but, as I say, we need the co-operation and support of hon. Members and local government to move forward.
    Mr. Keith Darvill: Does my right hon. Friend agree that the system of allocating local authority funds creates too many inequalities and anomalies? For that reason, it is important that the review be carried out as quickly as possible to ensure that local authorities such as the one in my area, the London borough of Havering, can resolve some of their difficulties in delivering public services.
    Ms Armstrong: We knew when we came to power that there were great problems within the local government finance system. We have made some adjustments.

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    More than that, we have substantially increased the amount of money going into local government compared with what went in under the previous regime. It is a question of ensuring both that we run the economy to get more money for good public services, and that we get a distribution system that is as fair as possible. We are seeking to do that, but I repeat: there is no holy grail and no system that everyone will think is fair to them.
    Mr. Nigel Waterson: Will the Minister undertake not to repeat the outrageous fix whereby, in the life of the current Parliament, shire counties will lose out by £623 million? Will she abandon the so-called front line first policy, under which funds will be diverted from properly elected local councils, with funding decisions being made by Ministers in Whitehall? The move was attacked recently by Sir Jeremy Beecham, the Labour leader of the Local Government Association, as amounting to
    the strange death of local democracy.
    Ms Armstrong: Let me nail once and for all the absolute rubbish that the hon. Gentleman comes out with time and again about funding for shire areas. Far from the position that he suggests, we have put substantially more money into local government in the past three years, including into the shires. If shire authorities received the same amount of money now as they received under his regime, they would be receiving substantially less. We have uplifted the amount that has gone in, and his crazy creative accounting fools no one.
    Mr. Jeff Ennis: Does the Minister agree that the grand objective of the review should be to reduce the differentials between the winners and losers under the existing system?
    Ms Armstrong: That could be one objective. We are canvassing a range of objectives. My hon. Friend needs to recognise that if we reduce the differentials, we also take less account of differential need.

    Council Tax
    Mr. David Heath: What is the average percentage increase in council tax for residents of band D properties in shire districts of England in 2000–01 from the previous year. [120149]
    The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Beverley Hughes): The average band D council tax for residents in shire districts is £848, an increase of 6.6 per cent. However, I think that a more accurate representation of what people really pay is the average council tax per dwelling. For shire districts, that figure is £735, an increase of 6.7 per cent.
    Mr. Heath: Whether the figure is 6.6 or 6.7 per cent, is it not true that the ordinary member of the public does not understand a word that we say about area cost adjustments and standard spending assessments? The public understand only that—regardless of who controls their council, and of their council's location and efficiency—each year, their council tax increases, while councils struggle to maintain services. Is that situation not the result of the fact that the current Chancellor, and
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    previous Chancellors in previous Governments, have shifted the taxation burden from central Government to local government? Is it not time that we had a system that was transparent and honest?
    Ms Hughes: The hon. Gentleman says that it does not matter who controls a council, but the fact is that in Labour-controlled authorities, the average council tax per dwelling is lower by about £100 than it is in Conservative-controlled or Liberal Democrat-controlled authorities. As for the Government's record—I shall not even begin to try to speak for the previous Government—we have increased the grant to local authorities by 8 per cent. in real terms. Moreover, in the three years since the previous general election, unlike the three years leading up to it, that increase has allowed local authorities to increase spending by about 20 per cent, compared with a real-terms spending cut and diminution in service standards under the previous Government.
    Mr. David Taylor: Is the Minister aware of the formation, last month, of the all-party fair deal for shire districts group, which I have the honour to co-chair? Does she agree that part of the problem is the fact that the SSA system fails to recognise the needs of smaller urban and semi-rural areas—areas such as North-West Leicestershire—which have growing populations and significant levels of unemployment and deprivation? Is she confident that the reform to which the Minister for Local Government and the Regions referred a moment ago will produce a better and more effective system for shire districts?
    Ms Hughes: As my right hon. Friend the Minister for Local Government and the Regions said, we are hoping that the creation of a fairer system will be the outcome of our review. However, such a system will depend on co-operation from all types of local authorities. If we are talking about a system that distributes money differently, we must be able to reach agreement not only with the authorities that might benefit from a different system, but with those that might feel that the current system is in their interests. Achieving that consensus is important.
    I acknowledge my hon. Friend's work in promoting the interests of shire districts, and I can tell him that, while working on the review, the Government have given shire districts a much fairer settlement than they have received in previous years. This year, I myself met representatives of the district councils, and they were very pleased with the settlement, which is well above the average for English authorities.
    Miss Julie Kirkbride: The Minister for Local Government and the Regions told my hon. Friend the Member for Eastbourne (Mr. Waterson) that he was wrong to say that the Government were starving shire counties of funds. Can the Under-Secretary therefore explain why, this year, residents of the shire district of Worcestershire—which has a Labour-controlled council—are facing a council tax increase of almost 10 per cent? Are they facing that increase because the Labour-controlled council is inefficient? Are they facing it because the Government are starving the shire district of Worcestershire of funds that rightfully belong to it? Or is the increase—as Opposition Members believe—part of the Government's programme of stealth taxes? Can the

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    Minister also explain to the pensioners of Worcestershire how they will pay that increase with the measly 75p increase in their pensions?
    Ms Hughes: Perhaps I can begin to attempt to unravel that ragbag of a question. I remind the hon. Lady that a council tax increase in any local authority is a direct consequence both of Government grant—which has increased—and of councils' decisions on their spending. It is right that local people, as well as Government, should contribute to the improvement of local services. The Tories are pursuing the argument—[HON. MEMBERS: "Answer the question."' I am answering the question as I choose to answer it. The Tories are pursuing the argument about stealth tax, but their figures are absolutely wrong. The Government have increased grant to local authorities in real terms by 8 per cent., compared with a real-terms cut of more than 4 per cent. by the previous Government. That demonstrates the different commitment of this Government to local government and local services.

    Disadvantaged Communities
    Mr. Bill Rammell: What steps he is taking to ensure that local people are involved in renewing disadvantaged communities. [120150]
    The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Beverley Hughes): The active involvement of local people is critically important in regenerating deprived neighbourhoods, as recognised in the social exclusion unit's recently published consultation document on the national strategy for neighbourhood renewal. My Department's programmes, particularly the new deal for communities and the single regeneration budget, already place great emphasis on the genuine involvement of local people at all stages.
    Mr. Rammell: Will my hon. Friend confirm that when it comes to regenerating disadvantaged communities, between 1999 and 2002 this Government will spend six times as much as the Conservatives did during their last three years in office, simply in terms of the single regeneration budget? Will she confirm that it is not just a question of money, and that it is essential that local people are involved in the process that decides how the money is spent? Will she confirm that when we talk about disadvantaged communities, we are not talking only about areas in the north of England, Scotland or Wales, because some are in the south of England?
    Ms Hughes: I can confirm my hon. Friend's point about money. Across the board since May 1997, the Government have spent almost £5.5 billion on regeneration schemes. That has been spent by my Department, and in education, health and elsewhere. That shows our commitment to regeneration and to helping those who were disadvantaged for two decades under the previous regime. We have learned from previous approaches to regeneration that unless local people are involved from the outset, and unless they have a say in decisions about priorities for their areas and how those should be achieved, any change will not be sustainable. My hon. Friend will see that the new deal for communities has been applied outside urban areas because there are
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    pockets of deprivation in all parts of the country, and the Government are committed to tackling deprivation wherever it occurs.

    Road Haulage Forum
    Mr. John Bercow: When he last met the road haulage forum to discuss transport issues. [120151]
    The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill): The last meeting was on 17 April.
    Mr. Bercow: I am grateful to the Minister for that informative reply. Given that the much-trumpeted cut in vehicle excise duty applies to only a tiny minority of heavy goods vehicles, will the Minister recognise that with fuel now by far the most expensive in Europe, with domestic profit margins slashed to the bone, with heavier foreign trucks seizing British business and with the Government taking seven times as much from the vehicle user as they spend on roads, his right hon. Friend the Secretary of State remains in the sights of road hauliers in my constituency as public enemy number one?
    Mr. Hill: The hon. Gentleman ought to contain himself—he is not on Lambeth council any longer. I do not recognise the true views of the road haulage industry in his remarks. This year's Budget gave a substantial boost to the trucking industry. For most lorries, real-terms taxation remained the same, and for some—notably the 40-tonne, five-axle lorry—the 10 per cent. cut in vehicle excise duty, worth £45 million, will provide an important boost to the international competitiveness of the UK haulage industry. In addition, the industry will benefit from increased spending on congestion hot spots and new roads schemes out of the extra £280 million for investment in transport announced by the Chancellor of the Exchequer. As the Freight Transport Association said:
    For transport, this has been a positive Budget.
    It knows what it is talking about, even if the Opposition clearly do not.
    Mr. Don Foster: Have not all those meetings with the forum clouded the Government's judgment? Is it not simply because of pressure from the forum that they have made the ill-judged decision to introduce 44-tonne lorries? Why have they listened only to the forum and totally ignored the advice from the major railfreight operator EWS, which has made it absolutely clear that the introduction of those lorries will reduce by 19 per cent. the share of freight carried on our railways? Will the Minister at least accept the need to do something and consider reducing railfreight access charges?
    Mr. Hill: The introduction of the 44-tonne lorry announced by my right hon. Friend the Chancellor in the Budget was made at the recommendation of the Commission for Integrated Transport, which calculated that it would reduce lorry trips by about 100 million a year. That is a significant contribution to the environment, and this Government, with our well-known commitment to the environment, are delighted to have made that judgment.

    Non-domestic Properties
    Mr. Bill O'Brien: If he will make a statement on progress in (a) the revaluation of non-domestic properties in England and (b) the revising of the distribution of the income from non-domestic council tax payments. [120152]
    The Minister for Local Government and the Regions (Ms Hilary Armstrong): The rating revaluation of non-domestic properties took effect on 1 April. We have no plans to revise the way in which the income from non-domestic rates is redistributed back to local authorities, the current redistribution being based on the size of the local population.
    Mr. O'Brien: May I draw attention to the problems and difficulties that small businesses are facing in town and city centres because of the revaluation of their properties? It is incumbent on the Government to ensure that that hardship is reduced in all ways possible. On the redistribution of income from non-domestic rates, may I draw attention to the fact that the Conservative Government withdrew the support to parish and town councils from the industrial rate? Will my right hon. Friend consider reinstating some of that resource to the smaller authorities so that they can generate much greater interest in their communities and provide the necessary services that come with parish and town council status?
    Ms Armstrong: The revaluation, which took effect on 1 April, means that the amount paid nationally in rates remains broadly the same, even though rateable values have increased by 25 per cent. That is because the rate poundage has been reduced from 48.9p to 41.6p. My hon. Friend will also want to know that we have recognised the particular pressures on small businesses, so for this year the maximum increase for any small business is 5 per cent., and in subsequent years it will be 7.5 per cent. At the same time, we have raised the level defining a small business to £12,000.
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    We are to publish a White Paper on rural policy this year, which, as my right hon. Friend the Minister for the Environment said earlier, will allow us to examine governance in rural areas. As part of that we will consider some of the issues concerning parishes. In the local government finance Green Paper, we will also be able to consider the specific issue that my hon. Friend has raised.

    Empty Properties
    Mr. Norman Baker: What steps he is taking to minimise the number of empty properties. [120153]
    The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin): We have successfully encouraged a significant number of local authorities to adopt empty homes reduction strategies. From this year, we are requiring all authorities to publish indicators of their performance in managing their own stock and returning private sector vacant stock to use. We have set up an empty property advisory group to develop an effective policy aimed at building on the steps that we have already taken.
    Mr. Baker: Before the Minister authorises the carpeting of what is left of greenfield Sussex with thousands upon thousands of new houses, will he take steps to change the council tax system, which gives a perverse incentive to leave properties empty? In Lewes district 812 properties get a 50 per cent. discount for being second homes or holiday homes, and 383 properties that get a 100 per cent. discount because they are unoccupied for six months or more. Will he have a word with the Chancellor, so that leaving properties empty will attract a penalty, not a benefit, for the owner?
    Mr. Mullin: The hon. Gentleman makes a serious point—up to a point. We shall examine in the White Paper the issue that he raises about empty properties. Although his question was phrased in a rather churlish way, the local council in Lewes has made quite good progress in reducing the number of empty properties, which has just about halved in the past four years. We would like other local authorities to emulate that example.

Rover-BMW
3.30 pm
The Secretary of State for Trade and Industry (Mr. Stephen Byers): With permission, I would like to make a statement concerning the latest developments at Rover.
Earlier today, BMW announced that it had agreed to sell Rover cars to the Phoenix consortium. Negotiations have been concluded and contracts signed. This is clearly good news—for the workers at Longbridge and the wider community in the west midlands. I am sure that it is news that all hon. Members will welcome, especially my hon. Friend the Member for Birmingham, Northfield (Mr. Burden) who is at Longbridge this afternoon and has worked hard to support the work force during this difficult period.
The agreement reached earlier today will preserve volume car manufacture at Longbridge; it will safeguard the majority of jobs there and minimise the knock-on effect in the supply chain.
I would like to add my personal congratulations to John Towers for the way in which he pulled the consortium together and brought what I know have been difficult negotiations to a successful conclusion. He has been determined and dogged in the face of hostility and criticism. His personal strengths will be invaluable to the Phoenix consortium.
Since BMW's decision to sell Rover, the Government's main concern has been with the workers at Longbridge, Rover suppliers and the communities affected. They have faced a considerable period of uncertainty over the past six weeks. It has been something of a rollercoaster period for them—swinging between dismay and hope as their future was decided in various negotiations with BMW.
Today's news finally provides some welcome certainty for the Longbridge site. However, there will still be a number of redundancies. Our priority now is to do everything that we can to help those who will be affected, to provide training and to attract new jobs to the area. That is the role of Government—to manage change and to equip people for change, not to leave them the innocent victims of change.
We have always been clear that the role of Government is not to run commercial negotiations between the interested parties. The Phoenix consortium has not sought Government finance for its proposals. John Towers has always been clear with me that the Phoenix bid had to be viable on its own and would get funding from commercial sources, and that is the case.
The Government have not played the old role of throwing money at a problem in the hope that it would go away. Nor have we adopted the laissez-faire attitude of the previous Government—just standing to one side and doing nothing. Instead, we have taken an active role to facilitate the commercial negotiations over the future of Rover, and to provide support for those workers and companies adversely affected by commercial decisions.
Our role has been to bring people together and to move the negotiations forward. It was the Government who brought John Towers and BMW together for their first face-to-face meeting a month ago on 10 April and we have remained in contact with both parties throughout the negotiations.
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We must now turn our attention to those who will be adversely affected by today's announcement. I am pleased that most of the work force will be offered a future at Rover, but we need to provide support for those who, regrettably, will lose their jobs. The Government will do all that we can to help.
I can announce that the taskforce that we created will remain in place, and I expect that its continuing work will take account of all developments, including today's announcements and the consequences for suppliers. It will produce a final report to me at the end of June.
My right hon. Friend the Secretary of State for Education and Employment and I have already put in place measures to assist any workers made redundant, to help affected supplier companies and to assist in attracting new investment and employment. Those measures will remain in place.
I am also able to confirm that the £129 million promised to the taskforce will remain available for good-quality projects in the region that provide long-term economic regeneration and job creation.
We must not underestimate the remaining difficulties ahead. The new owners of Rover will have to sell cars in a highly competitive market. The car industry is a fast-moving global market, going through major structural change. These are difficult times for vehicle manufacturers throughout the world, but a number of recent announcements have shown the strength of vehicle manufacture in the United Kingdom.
Last week, Vauxhall announced £189 million of new investment, creating 500 new jobs in its Luton factory. Honda has announced £130 million of new investment in Swindon; Peugeot has doubled production; Jaguar achieved record sales and record production in 1999; and last month's sales figures showed that British-built cars increased their sales in the United Kingdom, against the general trend.
There will be many lessons to be learned from Longbridge, which we will need to reflect upon. However, it is clear that there can be no return to outdated interventionism. The corporate state has been tried, and it simply did not work. Neither did a naive reliance on laissez-faire, which led to a crippling obsession with what Government should not do. The role for Government is to create an environment that encourages enterprise and creates wealth and jobs—[Interruption.] A third way, if the right hon. Member for Bromley and Chislehurst (Mr. Forth) would have it so.
Today belongs to John Towers, the Phoenix consortium, the workers at Longbridge and the people of the west midlands. Through adversity, they have all demonstrated great strengths, and we look forward to working with them to meet the challenges that lie ahead.
Mrs. Angela Browning: We welcome the fact that the Phoenix bid has been secured. We are particularly encouraged that it attracted financial support from the market.
It is nearly a year since the Secretary of State said that the long-term future of Longbridge was secure. He said today that there are lessons to be learned. I hope that this time, he and his Department will at least take an interest in the progress of Rover, and not be the last to know what is happening in an important industry in the UK.

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Although we have followed with interest the information that has come out today, I have some questions for the Secretary of State. Phoenix has taken over production of the business, but has it also acquired all the assets at Longbridge? What is the Secretary of State's understanding of the long-term future of the Swindon plant, on which Phoenix now has an option? Can he confirm exactly how many redundancies are expected?
How will today's announcement impact on the Rover dealerships? Are their futures secure? Does the right hon. Gentleman anticipate supporting applications for European Union funds for the company or for the region? What arrangements have been made for the export distribution of Rover, which has been locked into the BMW operation in Munich?
When the R30 was proposed, I asked the Secretary of State in a written question what impact that would have on UK suppliers. He replied that the R30 would provide opportunities for UK suppliers. Does the Phoenix bid continue to offer opportunities for UK suppliers?
Finally, how confident is the Secretary of State about the much-needed investment in the short term before Rover breaks even in two years' time?
Mr. Byers: I think that there will be disappointment on both sides of the House that the hon. Lady was not able to congratulate John Towers on the role that he has played. There will be disappointment that the right hon. Member for Wokingham (Mr. Redwood), who has criticised John Towers and Phoenix throughout the exercise, is not even in the House this afternoon for the statement.
The reality is that the people of Longbridge and of the west midlands will judge the Conservative party by its response to this issue. It ill becomes Conservative Members to talk about playing party politics with this issue, because that is exactly what they have done throughout. While we were getting our sleeves rolled up and doing the work, they were doing nothing. They were issuing press releases and notices that did not help the negotiations at all.
The reality is that there is a new owner for Rover, with a viable future—and with the commercial decisions that will have to be taken. However, it is not the job of Government to intervene in those commercial decisions. The hon. Lady will be pleased to know that the dealer network supports the proposal; the network is part of the Phoenix consortium.
As for the assets at Longbridge, we know that Hamshall—the engine facility—and Powertrain will be retained in the ownership of BMW. There will be developments at Longbridge which BMW and, no doubt, the Phoenix consortium will need to discuss.
The matter offers a clear lesson about the role of Government. The negotiations have been commercial; we have brought people together and I am pleased that there has been a successful conclusion. However, it is not part of our role to intervene in the way suggested by the hon. Lady. That is not the part that we shall play. We intend to support and facilitate. John Towers and Phoenix have made it clear that they have no proposals for applications for public finance, so I do not intend to answer a hypothetical question.
Mr. Martin O'Neill: I congratulate my right hon. Friend on his statement. He has not had the easiest
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of rides over this issue, but, were it not for his persistence in backing the Phoenix proposal and ensuring that it was on the agenda, we should not have reached this stage. In congratulating John Towers on his persistence, we must give due credit to the persistence displayed by my right hon. Friend.
I do not want to strike a sour note, but I have one question. The sums involved are comparatively small when set against the ambitions for the new models that are being developed. Is there any evidence that further funding could be available? I realise that the Government have no responsibility whatever to achieve such funding, but, as my right hon. Friend has played a part in bringing people together, can he tell us anything about the further investment that will be necessary for the survival and success of the scheme?
Mr. Byers: My hon. Friend is correct. There have been some difficult times over the past few weeks—some of them, I have to point out, created by his Select Committee, although I do not want to dwell on that point; the Trade and Industry Committee played a valuable role in the process.
On the substance of my hon. Friend's question, the Phoenix consortium is clear that, for the foreseeable future—the short and medium term—it has a viable project. However, the consortium makes it clear that it wants to enter a joint venture or an alliance with a major global car manufacturer for the long term. The consortium has been precise publicly as to its intentions: the short and medium-term approach is to safeguard the maximum number of jobs at Longbridge, but it is looking for an alliance with a global player in the near future so as to develop in the way described by my hon. Friend.
Dr. Vincent Cable: May I add a warm welcome to the announcement, and extend congratulations to Mr. Towers and his team—singling out Mr. Hemming in particular—in the face of much scepticism?
In view of the new arrangement, will the Secretary of State assure me that the Department of Trade and Industry has ceased all communications with Alchemy on the alternative, parallel proposal?
I welcome the fact that no public subsidy will be involved, but what will be the position of the Inland Revenue on the substantial tax implications arising from the losses of BMW-Rover and the acquisition of the new enterprises?
Will the Secretary of State also comment on the fact that, although the announcement is unambiguously excellent news, there is still a grave crisis in the car industry? That may be highlighted in a few days by the announced closure of Dagenham. Does he agree with the Confederation of British Industry, the Trades Union Congress and the Engineering Employers Federation that the crisis is primarily attributable to the high pound, or does he share the view of the shadow Chancellor of the Exchequer who said this morning that the high pound is good news for British industry and that we should get used to it?
Mr. Byers: Alchemy made a clear public statement earlier today that its discussions with BMW have terminated as a result of the contracts that have been entered into.

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On the relationship between Phoenix, BMW and the Inland Revenue, those matters will be dealt with in the normal way that they would be processed by the Inland Revenue.
On the hon. Gentleman's point about the strength of sterling, it is worth noting that, although there are difficulties in some parts of manufacturing as a result of the strength of sterling and the relative weakness of European currencies—it is worth reminding the House that, over the past week, the pound has depreciated in value against the dollar and the Japanese yen—some manufacturers in the car sector are still investing in the United Kingdom and in Vauxhall, Honda and Jaguar. Therefore, there is some good news in the car sector. We know that Ford is reviewing its operations in the whole of Europe, but that has not been motivated by any concerns about the strength of sterling. It has been led by over-production in the car market, which, in the case of Ford, is about 20 to 25 per cent. in Europe.
Mr. Peter Snape: Does my right hon. Friend accept that there will be unabashed rejoicing among thousands of families in the west midlands at his announcement today? Many Labour Members have watched and listened with concern to the amount of criticism that he personally has had to put up with over the past few months, so will he accept our congratulations on his announcement? Does he not think that it is a great pity that it was not met with greater pleasure by the cynics on the Opposition Benches, some of whom had hoped that Rover would fail to better their own political advantages?
Mr. Byers: There has been an attempt by some Opposition Members to use the issue for narrow party advantage, but I have to say that there are some honourable exceptions. [HON. MEMBERS: "Name them."] I shall not name them because it may do what political careers they have some damage. However, I value the help that they have been able to give. In the taskforce and as constituencies Members of Parliament, they have played a valuable role.
My hon. Friend is right. We now need to reflect on what has happened. We must recognise that, although today's announcement is good news and that people will be celebrating, we should not lose sight of two issues. First, there will be a number of redundancies. When I spoke to John Towers about half an hour ago, he thought that he would be able to keep the number of redundancies to below 1,000, which would be excellent news, given the prospects that we were facing. However, each of the individuals made redundant will face a real crisis and we have to give them help and support.
Secondly, there will be challenges ahead for Phoenix as the new owner of Rover and of Longbridge. We should not underestimate that point. I know that the Phoenix consortium does not underestimate the challenges that it will face, and we look forward to working with it, as we do with other companies, to overcome the difficulties that might lie ahead.
Sir Norman Fowler: I declare an interest as a working member of the Rover taskforce.
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I congratulate John Towers and his team on the success of their negotiations, which will be welcomed in the west midlands. I very much wish them well.
Is it not important to stress that recovery has not yet been won and that it will almost certainly require tough decisions by Phoenix along the way? Irrespective of what has happened today, it must remain a vital objective that the industrial base of the west midlands is expanded. That must remain a priority for the region.
Mr. Byers: I thank the right hon. Gentleman for the constructive role that he has played as a member of the taskforce. I value his input into its deliberations and recommendations.
The right hon. Gentleman makes the important point that, while there is good news for Longbridge, there will be consequences throughout the west midlands that will not be helpful. We should look for ways of encouraging new investment including inward investment and creating new jobs for the future.
Over the past six weeks I have learned at first hand of the great strengths that exist in the west midlands. There are strengths of character and the skills that are needed for the jobs of the future. I have no doubt that when an inward investor considers the opportunities that the west midlands has to offer, we shall find within a matter of days rather than weeks that announcements will be made by major multinationals that they will locate in the area. That will be the clearest signal to the people of the west midlands that they have something that is valued and that they have players who could go anywhere in the world but are choosing to locate in the area. I shall be doing all that I can in the hours and days ahead to secure such decisions.
Ms Julia Drown: I welcome my right hon. Friend's announcement. As he knows, the future of many of my constituents is dependent on the future of Longbridge. Obviously we are still expecting some redundancies and some scaling down at Longbridge. Can my right hon. Friend assure my constituents that the taskforce, which is mainly designed around the west midlands, will continue to work with workers in my constituency, who are also affected by the decisions, as well as others in the supply chain, to ensure that as many as possible of their highly skilled and valued jobs are retained and their futures secured?
Mr. Byers: My hon. Friend has been a powerful advocate for the Swindon plant. As at present, BMW is retaining the facility. However, as the plant is dependent on both Longbridge and Solihull, there will be a knock-on effect depending on the outcome of the detailed negotiations with Phoenix and those that are continuing with Ford on the situation at Solihull. Much will depend on the future strategy that the new owners of the two operations decide to develop.
I can give my hon. Friend an assurance that the help that we want to give to the west midlands is the help that we shall provide to facilities and plants in other parts of the country that will be affected by these decisions. It may mean that we shall need to find additional resources to meet demands, but it is something that we are prepared to do. We shall reconfigure our budgets to ensure that the people of Swindon or others in the supply chain elsewhere

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are recognised as the innocent victims of what is happening. We shall not leave them; we shall stand with them and overcome the short-term difficulties that they will face.
Mr. John Maples: Can the Secretary of State give the House any information on the future of the Gaydon design and test centre, where several thousand people are employed in south Warwickshire? Does he know how many of the employees will have their jobs safeguarded by the Phoenix bid? Is he in a position to say whether Ford has yet confirmed that as part of its takeover of Land Rover it will take on Gaydon and nearly 2,000 employees? Ford said originally that it would but it then became clear that it was a matter of negotiation. Is the right hon. Gentleman able to clarify any of these points?
Mr. Byers: We have been in discussions with Ford about its proposals for Gaydon. Its discussions with BMW are still continuing. It hopes that they will come to a conclusion within the next two months or so. It is a complicated set of discussions and due diligence is taking place. Ford is working on the proposal, as originally suggested, that it would take over the Gaydon facility and those employees who are linked with Land Rover at Solihull. A number of those employees will then be linked with the Mini, which is to remain at Cowley. That announcement was made by BMW today. Other employees may be engaged by Phoenix.
As far as I am aware, Phoenix has not yet made a statement about its intentions regarding workers at Gaydon who may be linked with any models being developed under the new ownership of Phoenix at the Longbridge plant. Our latest information is that Ford is still discussing with BMW the acquisition of the Gaydon site and the workers who would go with the Land Rover operation.
Mr. Geoffrey Robinson: My right hon. Friend has been fulsome in his tribute to Mr. Towers and his team. I am sure that he will be pleased to know that all of us on the Government Benches agree with him on that. Is he aware that we feel that he has played a critical role in the negotiations? He has been plunged into a crisis not of his making, and has supported an arrangement with Mr. Towers that was subject to attack on many sides, and we should like to congratulate him on that.
The important lesson to be learned—which the Secretary of State has not mentioned—is that his Department will continue to play a critical role in such matters in future. As we look forward to a more settled future after the present crisis, international arrangements and partnerships will have to be agreed so that Rover's future can be more secure. We pay tribute to my right hon. Friend's magnificent achievement, but ask him to give a commitment to ensure that those arrangements can be secured, thus avoiding similar crises in future.
Mr. Byers: I thank my hon. Friend for his warm words. I assure him that I do not see today as the end of the book—rather, one chapter has come to an end and a new one is beginning. Much work will need to be done. The point that I made about working together to meet the challenges ahead addressed indirectly the sorts of
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initiatives and proposals to which my hon. Friend referred. The Department and the Secretary of State will continue to play a role in helping the new owners of Rover in the United Kingdom and internationally. We will do that for the Phoenix consortium, the workers at Longbridge and the wider community in the west midlands.
Mr. Robin Corbett: On behalf of the people of Birmingham and the west midlands, I thank my right hon. Friend for his efforts in bringing Phoenix and BMW together. I also thank him for confirming that the taskforce and its funding will be continued to help casualties of the change in the business.
Will my right hon. Friend join me in encouraging all those who got together to keep Rover on the road to get behind the wheel of a Rover, the better to ensure the future of Longbridge as well as jobs in its supply chain and dealerships?
Mr. Byers: One of the interesting facts to emerge is that sales of Rovers have taken off in the past month, as many people are choosing to buy Rover models. If John Towers and the Phoenix consortium maintain that level of sales, they will have no difficulties in future. I certainly know that John Towers and the Phoenix consortium have thought about their marketing strategy in detail, and I hope that people will consider carefully the attractive models offered by the new owners of Rover.
Miss Julie Kirkbride: The news that the bid is going ahead is extremely welcome and heartening for the 1,500 workers in my constituency employed at Longbridge. However, it has been a time of great anguish and uncertainty for those people, so it is important that the Phoenix bid has a long-term future.
Will the Secretary of State give us further details about his conversations with Mr. Towers today? The flow of events so far suggests that production at Longbridge will be cut by half to between 150,000 and 200,000 cars. Is that consistent with 1,000 job losses and maintaining a work force at Longbridge of about 7,000?
Will the Secretary of State also tell us what car will replace the Rover 25 and Rover 45? Is such a car in the pipeline, or will that depend on an international company coming forward with a new product for Longbridge?
Mr. Dennis Skinner: Sell the BMW.
Mr. Byers: I do not know whether the BMW has been sold yet.
As the new owner of Rover, John Towers is addressing those issues. It is only right and appropriate that, as the new commercial owner of Longbridge, he should make announcements about the number of redundancies and the new models that he wishes to develop at the plant. Today, he said clearly and publicly that Longbridge will develop models such as the Rover 75, which is coming up from Cowley. I know that the Phoenix consortium want to develop the estate version of that car. Proposals have been announced by John Towers and the Phoenix consortium,

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but it is appropriate that such announcements are made by the commercial body now responsible for those decisions, not by me as Secretary of State.
Mr. John M. Taylor: Will the Secretary of State say a little more about Land Rover in my constituency, and about Rover pensioners generally?
Mr. Byers: I welcomed the opportunity of visiting, with the hon. Gentleman, the Land Rover plant in Solihull two or three weeks ago. It was valuable for me to see at first hand the excellent facilities at the plant and the commitment of the work force in difficult circumstances. I know that Ford is committed to the future of Land Rover, and they have exciting plans to develop the Solihull site.
The hon. Gentleman has raised the issue of pensions before. We have received assurances about the security of pensions, but I am waiting to receive confirmation in writing so that I can put in writing the response received from BMW and the new owners of Longbridge and Land Rover at Solihull. I shall do that not only for present employees but for pensioners who are concerned about the future of their pension entitlement.
Ms Debra Shipley: I join my colleagues in welcoming my right hon. Friend's statement today, which will come as a great relief to my constituents and to the small businesses located in my constituency that supply Longbridge. I am pleased that he will support those who are made redundant and their families. However, may I ask about the £129 million which, I understand, will remain available to the taskforce? To be obvious about it, how can businesses in my constituency gain access to that money?
Mr. Byers: We have in place a scheme to help companies in the supply chain that face difficulties, and we have made £12 million available already. Given the nature of my hon. Friend's constituency, it is entirely possible that the organisations and employers that she is talking about will regard access to support for the supply chain as a means by which we can be of immediate assistance. If individual companies are feeling the pressure of events, they should get in touch with the taskforce, which is monitoring the situation and ensuring that those who are experiencing difficulties can be routed in the right direction.
Mr. Tony Baldry: The Secretary of State will be aware that, all along the M40 corridor, from Oxford to Birmingham, there are many component manufacturers. When Alchemy was in play, representatives told the Select Committee that, because of the pound's strength, the only way to make the figures work was by sourcing more components from overseas. What assurances has the right hon. Gentleman been given by the Phoenix group that it hopes to continue to source components in the west midlands and the UK, whenever possible?
Mr. Byers: The Phoenix consortium is more likely than any of the alternatives that were on offer to source more components in Britain. Part of its marketing strategy will be that the cars that it makes are British cars, made by a
654
British-owned company. I think that that will be a strong selling point, which it is good news for component suppliers. I know that the Select Committee took evidence on the subject and that it is a matter of concern, but I believe that the Phoenix option will be far better for suppliers than either Alchemy or closure of the Longbridge site would have been.
Dr. Lynne Jones: I, too, congratulate my right hon. Friend on all the efforts that he put in behind the scenes to help bring about today's welcome announcement. I endorse his comments about John Towers and his perseverance in the face of criticism—perhaps those comments apply to my right hon. Friend as well.
However, do the Government accept that the pound is overvalued, that the low value of the euro does not reflect the strength of the European economy, and that that is harming our manufacturing industry? Does my right hon. Friend agree that the Government should work with our European partners to do everything possible to bring about a more realistic alignment of those currencies?
Mr. Byers: My hon. Friend is right to point out that certain sections of manufacturing are experiencing difficulties as a result of the relative strength of the pound against the European currencies. I happen to believe that the best way in which the European currencies can begin to strengthen is through effective economic reform. A wholehearted embracing of the recommendations of the Lisbon summit would be the best way of ensuring that European economies demonstrate their commitment to economic reform. That would help to strengthen the European currencies, which is where I think that the problem lies, rather than in the strength of sterling, given that, as I said, it has depreciated in value against the American dollar and the Japanese yen over the past few days.
Mrs. Caroline Spelman: The Secretary of State has indicated some rationalisation in the supply chain to Rover for which he might be prepared to make available additional resources. Given his experiences last time, has he clarified that that would be within European Union rules?
Mr. Byers: The hon. Lady is one of those hon. Members who have played a constructive part as constituency Members of Parliament in what I know have been a difficult few months for many Members and their constituents. She raises an important point. If state aid is involved, it must clearly now receive approval from the EU. However, much of the taskforce's work—certainly with help in the supply chain—does not fall within European state aid rules. Therefore, we can and are already making support available in the supply chain; companies are already receiving financial support. We do not have such a problem with many of the taskforce's proposals. Support for the supply chain is one example of our making decisions that are not within the EU' s remit.
Mr. Dennis Turner: As Chairman of the Catering Committee, I think that we ought to have a really lovely party today to celebrate. We are all very glum on a day on which we have had wonderful news. I assure the Secretary of State that there

655
will be singing and dancing in the streets of your constituency, Madam Speaker, as well as mine, and throughout the black country and the west midlands.
I thank the Secretary of State for all his work behind the scenes in negotiations. I would also like to say a special word to the Prime Minister, who last week received a deputation from the workers at Rover. He was very courteous and concerned about the plight of Rover. Today, the great cloud is lifting. I agree with my hon. Friend the Member for West Bromwich, East (Mr. Snape) that we should rejoice; today is a lovely day.
Mr. Byers: I thank my hon. Friend and look forward to raising a glass or seven with him this evening.
Dr. Evan Harris: I join the Secretary of State in welcoming the Longbridge solution to the Rover problem. Does he recognise the concerns of my constituents who work for Rover at the Cowley plant in Oxford, where there will not necessarily be dancing in the streets? What reassurance can he give those workers who face being laid off because, under the Phoenix plan, the Rover 75 line will move to Longbridge months before the Mini goes to Cowley? Even though, since Thursday, Oxford is no longer a Labour stronghold, will he still put political energy into the problems at Cowley to ensure the short-term and long-term future of the highly skilled workers at that modern plant?
Mr. Byers: The hon. Gentleman's final remark ill becomes him. Perhaps when he reflects on it, he will regret having made it.
When I visited the shop stewards and management of Cowley about four weeks ago on returning from a meeting with the BMW management in Munich, I was very clear with them that the issue affected not just Longbridge but all plants in the Rover group that were part of BMW. We have been raising the question of Cowley in discussions with BMW throughout the past few weeks. The hon. Gentleman needs to be aware that although BMW's announcement today said that the 75 line would be moved to Longbridge, it confirmed that the Mini would be made at Cowley.
Mr. Snape: The new one?
Mr. Byers: Yes; BMW has given guarantees about that. However, the hon. Gentleman raises an important point about the gap between the R75 going to Longbridge and the new Mini beginning production at Cowley. Earlier today BMW gave an assurance that although there will be a gap, there will be no redundancies as a result of the decisions that it has taken. I am sure that the hon. Gentleman will welcome that.
Mr. Ian Pearson: May I add my welcome for today's news and warmly congratulate my right hon. Friend on his active role in brokering a commercial deal that offers a brighter future for the work force at Longbridge? Does he agree that for the future, topline sales are vital for Rover and other British car manufacturers? British jobs depend on British people buying British cars. Will my right hon. Friend undertake to publicise widely the car models that are made in Britain and encourage people to buy British?
Mr. Byers: In a highly competitive market, there must be a product that people want to buy. I know from my
656
conversations with John Towers that he is mindful of the situation. Good will alone will not make Phoenix successful. It must offer a good-quality product at a price that people are prepared to pay. That is what Phoenix intends to do. Given the hard-headed approach that it is adopting, it stands a great chance of success.
Dr. Tony Wright: I congratulate my right hon. Friend on his announcement. It may have been greeted with visible disappointment on the Opposition Benches, but I can assure him that throughout the west midlands it will be greeted with satisfaction and hope. Will he make sure that what he has just said about investment and regeneration connects with the revisions to the assisted areas map that are under consideration? Many west midlands constituencies are being severely affected by the revision of that map—for example, four out of five wards in my constituency have been dropped from the original proposal. If we are serious about west midlands regeneration, will my right hon. Friend make sure that the statement on assisted areas connects with his statement today?
Mr. Byers: My hon. Friend will be aware that we have just concluded the consultation period on the revised map, and we are now considering our response to that. I have no doubt that the situation in the west midlands will be one of the issues on which we need to reflect and which will inform our response to the consultation exercise.
Mr. Ken Purchase: I of course add my welcome to the many others that have been given in the House. There is a long journey ahead. We should pause and recognise that the role played by the trade unions during the long negotiations has been crucial. Their patience, understanding and perception of the problems has been exceptional. I know that during the coming months and years, the trade unions and their working members will work closely with the management to ensure that on competition, unit costs and the general production of a superb range of cars they will work together. We should recognise that working together is always better than working alone.
Mr. Byers: My hon. Friend is right to point out the difficulties that still lie ahead. There is no getting away from that. We can celebrate today, but we should not lose sight of the fact that difficult decisions will have to be taken in the period ahead. My hon. Friend is also right to point out the valuable role—and, if I may add my own comment, the positive and constructive role—that the trade unions played in the exercise that we have been through over the past six weeks or so. They have been a force for good in what has happened, and we should not lose sight of that. They will play an increasingly important role in the period ahead. As my hon. Friend says, if Phoenix is to be the success that we all hope that it will be, people will have to work together with a real sense of partnership. That is the best way of overcoming any difficulties that may lie ahead.
Mr. Lindsay Hoyle: Obviously, the whole country breathes a sigh of relief today. I do not believe that there is a constituency that would not have been touched if Rover had been allowed to close. Whether through the dealerships or the component manufacturers,

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we will all benefit from the good news. Thanks ought to go to John Towers and to the trade unions, but questions must be asked. What will happen to the Rover 30? Will that come to Longbridge? Will an export market in America be opened up for the MG sports cars? Increased sales in the American market will give encouragement to the workers at Rover and to the component manufacturers.
Mr. Byers: My hon. Friend raised the issue of the R30 with the head of Rover UK during a Select Committee meeting and received an answer that was less than satisfactory. We should continue to argue for the development of the R30 in the UK. It is a UK idea and its development here would be a compliment to our manufacturing base and car industry.
My hon. Friend's question also raises an important point about access to the American market for the MG and Land Rover, which has perhaps not been marketed as well as it could have been. I have no doubt that the new owners—Ford in the case of Land Rover, Phoenix in the case of the MG—will consider export opportunities, especially to the United States.

Point of Order
4.16 pm
Mr. Andrew Robathan: On a point of order, Madam Speaker. I seek your guidance on a matter about which I have given you prior notice. It is alleged that the Deputy Prime Minister has a flat in Clapham at a beneficial rate from a transport union. That would be contrary to paragraph 113 of the ministerial code of conduct. A flat might constitute a registrable interest. The ministerial code of conduct is neither your responsibility, Madam Speaker, nor that of the House. It is the Prime Minister's responsibility. He has referred a complaint on the matter to the Department of the Environment, Transport and the Regions.
Every Member is bound by the rules of the House, especially the advocacy rule. The report of the Committee on Standards and Privileges on "Advocacy and Declaration" states:
Members may not initiate any parliamentary proceeding which relates specifically and directly to the affairs and interests of a body in which they have a declarable interest.
Today, we are discussing the Transport Bill, which the Deputy Prime Minister introduced. We shall discuss amendments that he tabled. Other hon. Members and I have complained to the Parliamentary Commissioner for Standards. I was initially told to expect a report before Easter, but the Committee has yet to report.
If the Deputy Prime Minister's flat is registrable, is he in breach of the House's rules, and are our proceedings on the Transport Bill therefore out of order? I understand that you may be unable to rule on the matter, Madam Speaker. If the rules of the House have been broken, to whom may we turn?
Madam Speaker: I have a feeling that that is less a point of order and more a point of political argument. However, I shall try to give the hon. Gentleman guidance on the matter. Today's proceedings are perfectly in order. I am not sure whether the Deputy Prime Minister will take part in them—I hope that he will—but he is welcome to do that and it is in order for him to do so.
In so far as the hon. Gentleman's point relates to the Deputy Prime Minister's responsibilities as a Minister of the Crown, any complaint or allegation should be made to the Prime Minister. As the hon. Gentleman said, that is not a matter for me. If he wants to make complaints or allegations against the Deputy Prime Minister as an individual Member of Parliament, he should make them to the Parliamentary Commissioner for Standards. Every hon. Member knows those procedures. I hope that I have explained them for the last time.

Point of Order
  New Member
  The following Member took and subscribed the Oath: Sandra Julia Gidley, for Romsey.

Ethical Trading
4.20 pm
Mr. Andrew Rowe: I beg to move,
That leave be given to bring in a Bill to require retailers to apply the same standards when purchasing from other countries as they apply when purchasing within the United Kingdom.
As you know, Madam Speaker, I am the Member of Parliament for Faversham and Mid-Kent. You may not know that my constituency is alleged to contain the largest acreage of top fruit in the United Kingdom. However, given the speed with which fruit farmers are having to grub up their orchards, I wonder how long that privilege will remain.
The House knows that the farming community is going through an extremely bad time. Small farmers are leaving the business and their way of life at ever-increasing speed and there seems to be no light at the end of the tunnel. A strongly held belief in the farming and horticultural communities is that they are frequently prevented from selling their produce to big retailers in this country because the standards that those retailers impose are relaxed for imports. It is hard to establish whether that strongly held belief is wholly or partly true because the big retailers are cagey about how much information they provide. However, it is clear that there is a good case for ensuring that it is no longer reasonable to hold such a belief so strongly.
My simple Bill proposes that it should be illegal for a major food company to import any food product if it can be shown that it has refused to purchase from a British supplier for reasons of standards and that the standard of the food that has been imported is the same or lower than that which it has refused to buy in Britain. That would make it absolutely clear that a level playing exists across the world and ensure that the big retailers, which have such a stranglehold on the market, behave as ethically as they claim.
One of the origins of my Bill was a session that the parliamentary fruit group held with a representative of one of the large supermarkets. He explained persuasively and at great length how ethically his company behaved and how it used its market power to drive up the standards of their suppliers around the world. However, when he was asked whether it would relax those standards if a product ran short and import it from wherever it could be found, he said, "Ah, that is nothing to do with the company; that is to do with the Government."
My Bill aims to provide the Government with the opportunity, within the law, to allow those retailers to feel secure in the knowledge that they can behave as ethically as they claim to do. That is important, because if we are serious about protecting our children from pesticide residues, or if our consumers are anxious about the
660
standards under which pigs or other livestock are reared, it is essential that they should be as well protected from pesticide residues from Spain or the Caribbean as they are from pesticide residues at home. If the retailers are behaving as well as they claim to be, they can have no objection to my Bill, because it merely reinforces the position as it is alleged to be; but if they are not behaving in that way, the Bill will give much-needed protection to British farmers.
Every Member of Parliament has an interest in ensuring that the share of British food sold by British farmers increases. Many of the difficulties of British farming would diminish greatly if we could obtain a larger share of the domestic market, and the cry for increased subsidy would also diminish greatly if we were obtaining a larger share of our home-grown market.
Many of the difficulties of the farming community are caused by the fact that a large number of big purchasers employ young men and women whose arrogance—backed by the power of their companies—is so great that long-established farmers find it difficult to believe what they are told. They often believe that what is being imported is of a lower standard, to their great detriment.
Let me give an example that featured in the debate on labelling initiated by my hon. Friend the Member for Eddisbury (Mr. O'Brien). Chickens from Thailand, having entered this country and been processed in some minor way, are often regarded as British, although as far as anyone can see they contain no British component. They have been shown to contain rather more unwelcome chemicals, or hormones, than they should contain according to British standards. It is that kind of story, multiplied a hundred times, that is causing so much distress in the farming community.
I consider the current state of affairs to be entirely wrong. I believe that my simple little Bill would end it, and I hope very much that the House will allow me to bring it in.
Question put and agreed to.
Bill ordered to be brought in by Mr. Andrew Rowe, Mr. James Gray and Mr. David Prior.

Ethical Trading
  ETHICAL TRADING
  Mr. Andrew Rowe accordingly presented a Bill to require retailers to apply the same standards when purchasing from other countries as they apply when purchasing within the United Kingdom: And the same was read the First time; and ordered to be read a Second time on Friday 21 July, and to be printed [Bill 122].

  TRANSPORT BILL [WAYS AND MEANS] (No. 2)
  Resolved,
  That, for the purposes of any Act resulting from the Transport Bill, it is expedient to authorise the imposition of charges to corporation tax by provisions relating to transfers connected with railways.—[Mr. Robert Ainsworth.]

Transport Bill (Programme)
Motion made, and Question proposed,
That the following provisions shall apply to remaining proceedings on the Transport Bill:—

Transport Bill (Programme)

  Timetable
  1. Proceedings on Consideration and Third Reading shall be completed in two allotted days.
  2.—(1) Subject to the Speaker's power to select the amendments, New Clauses or New Schedules to be proposed, proceedings on Consideration shall be taken in the following Order; New Clauses 35, 36, 37, 26, 5 and 27; other New Clauses relating to Part I; amendments relating to Part I; New Clauses 6 and 14; other New Clauses relating to Part II; amendments relating to Part II; New Clauses 28 and 30; other New Clauses relating to Part III; amendments relating to Part III; amendments 420 and 412; New Clauses relating to Part IV; other amendments relating to Part IV; amendments relating to Clauses 227 to 229 and Schedule 26; New Clause 3; Remaining New Clauses; New Schedules; amendments relating to Clauses 230 to 237 and Schedule 27.
  (2) Each part of proceedings on Consideration shall, if not previously concluded, be brought to a conclusion at the time specified in the case of that part in the following Table.

  TABLE

  Proceedings

  Time for conclusion of proceedings

  First allotted day

  New Clauses 35, 36, 37 and 26.

  Four hours after commencement of proceedings on the Motion for this Order

  New Clauses 5 and 27; other New Clauses relating to Part I; amendments relating to Part I.

  Five and a half hours after commencement of proceedings on the Motion for this Order.

  New Clause 6

  Six and a half hours after commencement of proceedings on the Motion for this Order

  New Clause 14; other New Clauses relating to Part II; amendments up to the end of Clause 123.

  Seven and a half hours after commencement of proceedings on the Motion for this Order.

  Remaining Amendments to Part II.

  Eight hours after commencement of proceedings on the Motion for this Order.

  Second allotted day

  New Clause 28.

  One and a half hours after commencement of proceedings on the Bill.

  New Clause 30; other New Clauses relating to Part III; amendments relating to Part III;

  Three hours after commencement of proceedings on the Bill.

  Amendment 420

  Four hours after commencement of proceedings on the Bill.

  Amendment 412; New Clauses relating to Part IV; other amendments relating to Part IV; amendments relating to Clauses 227 to 229 and Schedule 26.

  Five hours after commencement of proceedings on the Bill.

  New Clause 3; Remaining New Clauses; New Schedules; amendments relating to Clauses 230 to 237 and Schedule 27.

  Five and a half hours after commencement of proceedings on the Bill.

  3. Proceedings on Third Reading shall, if not previously concluded, be brought to a conclusion six hours after the commencement of proceedings on the Bill on the second allotted day.
  Questions to be put
  4.—(1) For the purpose of bringing any proceedings to a conclusion in accordance with the preceding provisions the Speaker shall forthwith put the following Questions (but no others)—

  (a) any Question already proposed from the Chair;

  (b) any Question necessary to bring to a decision a Question so proposed;

  (c) the Question on any amendment moved or Motion made by a Minister of the Crown;

  (d) any other Question necessary for the disposal of the business to be concluded;

  (2) On a Motion for a new Clause or a new Schedule, the Speaker shall put only the Question that the Clause or Schedule be added to the Bill.
  (3) If two or more Questions would otherwise fall to be put under sub-paragraph (1)(c) on amendments moved or Motions made by a Minister of the Crown, the Speaker shall instead put a single Question in relation to those amendments or Motions.

  Miscellaneous
  5. Standing Order No. 15(1) (Exempted business) shall apply to proceedings to which this Order applies.
  6.—(1) If at this day's sitting—

  (a) a Motion for the Adjournment of the House under Standing Order No. 24 (Adjournment on specific and important matter that should have urgent consideration) stands over to 7.00 p.m.; and

  (b) proceedings on the Motion for this Order have begun before that time, the Motion for the Adjournment shall stand over until the adjournment of proceedings on the Bill at this day's sitting.

  (2) If on the second allotted day a Motion for the Adjournment of the House under Standing Order No. 24 stands over to 7.00 p.m. or from an earlier day, the Motion shall stand over until the conclusion of proceedings on the Bill.
  7. No Motion shall be made, except by a Minister of the Crown, to alter the order in which any proceedings on the Bill are taken or to recommit the Bill (whether as a whole or otherwise); and the Speaker shall put forthwith any Question necessary to dispose of any such Motion made by a Minister of the Crown, including the Question on any amendment.
  8. No dilatory Motion shall be made in relation to the Bill except by a Minister of the Crown; and the Question on any such Motion made by a Minister of the Crown shall be put forthwith.
  9. Proceedings to which this Order applies shall not be interrupted under any Standing Order relating to sittings of the House.
  10. Standing Order No. 82 (Business Committee) shall not apply to the Bill.

  Supplemental orders
  11. If any Motion is made by a Minister of the Crown for varying or supplementing the provisions of this Order, proceedings on the Motion shall, if not previously concluded, be brought to a conclusion one hour after they have commenced; and Standing Order No. 15(1) shall apply to those proceedings.
  12. If the House is adjourned, or the sitting is suspended—

  (a) at this day's sitting, before the adjournment of proceedings on the Bill; or

  (b) on the second allotted day, before the conclusion of proceedings on the Bill, no notice shall be required of a Motion made at the next sitting by a Minister of the Crown for varying or supplementing the provisions of this Order.

  Interpretation
  13. In this Order—
  "allotted day" means this day and any day on which the Bill is put down on the main business as first Government Order of the Day; and
  "the Bill" means the Transport Bill.—[Mr. Robert Ainsworth.]
  4.28 pm
  Mr. Eric Forth: All guillotines are an affront. This is as bad as most, and worse than many.
  Guillotines, surely, represent a failure of the parliamentary process. They imply that the House has neither the disposition nor the time to deal properly with the matters at hand. They also render impossible the main function of the House, which is to scrutinise legislation properly; and they deny Back Benchers, in particular, an opportunity to give their attention to it. I suspect that they also imply the existence of an excess of legislation. The fact that a guillotine needs to be introduced at any stage of the parliamentary Session suggests that the Government are putting too much legislation before the House, and the House feels that it is not being given proper time to deal with it.
  That applies particularly in the case of this Bill, which by any measure is large and important. One would have thought that the House would want to give a proper amount of time to its consideration—especially at this stage, when we are faced with a substantial number of amendments. I look in particular at the first grouping that is proposed in the timetable motion. Not only are there at least 40 distinct items to be considered in the four hours to be allocated, but they range across very different subjects.
  Mr. Richard Shepherd: Four hours are not allocated to that group of amendments. Under Standing Orders, the first three hours are allocated to this debate. If we had three hours on the debate and a Division at the end, the Government would intend to dispose of all those matters within about 40 minutes.
  Mr. Forth: I am grateful to my hon. Friend for his correction. I was assuming that, given my customary brevity, the House would not be detained for any great length of time. Depending on what he wishes to say, if he catches your eye, Mr. Deputy Speaker, that may or may not be the case. My hon. Friend is right. In certain circumstances, there could be as little as three hours or less to consider the 40 items that I have mentioned; the four hours are a maximum.
  The items range across different issues such as loans and grants, the disposition of shares, directorships, the parliamentary process itself and the key issue of the nature of the company that is to be set up. All those items are supposed to be properly scrutinised and considered in the House of Commons in a period that could be as little as under an hour and that, at most, will be something short of four hours.
  That is bad enough. It is proposed to give the next grouping an hour and a half. I count 90 Government amendments and 20 other amendments. How is the House is supposed to consider them properly? That is less than one minute per item, if one wants to look at it in that way. An hour is allocated to a later grouping: it is proposed to deal with 36 Government amendments and seven others in that time.
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  I do not want to go into any more detail. The matter explains itself. It is a pathetic admission of failure by the House as a whole, by hon. Members and by those who propose the timetable motion because it suggests that the House of Commons has lost interest in its principal function: the proper scrutiny of legislation. The motion arrogantly implies that we Back Benchers should be prepared to allow the matter to slip through—this enormous Bill, this enormous number of amendments—in one brief sitting today of somewhat short of eight hours and in a sitting tomorrow of six hours. It is pathetic.
  That the House of Commons should have come to this makes me feel very sad. I would like to think that it will never happen again, but I am not sure, given the Government's propensity not only to bring excessive numbers of Bills before the House—and to make them excessively long—but to be forced by their incompetence to introduce so many amendments to their Bills. All those factors add up to the fact that we can see what the Government's attitude to the House of Commons and its traditional function is. I deprecate the whole thing.
  4.33 pm
  Mr. Richard Shepherd: My regret goes a little further than that of my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth). On the Order Paper, the motion stands in the name of Front-Bench representatives of the principal parties. They have clearly sat down and considered what is the best way of debating the Bill; I take that on trust because no speech has yet been made to justify why the mechanism is necessary.
  Why are we cutting off the rights of Members of Parliament—the representatives of constituencies—to speak? Why are we reducing on the most important issues the ability of any one of us—it is what we were elected for—to speak on behalf of our constituents and to express anxieties or balanced arguments as to why the measures or clauses are appropriate or inappropriate?
  Such motions used to be a matter of great solemnity for the House. They were barely used. The Government have now introduced, I think, 36 principal guillotine motions; in fact, there have been nearly 50 guillotine motions. I know that that might even shock the Secretary of State for the Environment, Transport and the Regions. I know how vigorous he was in opposing the decisions of past Conservative Administrations to impose guillotines.
  The Secretary of State may think, now that he is in office, that guillotines are right, but when he was not in office, he clearly thought that such motions were wrong. Nevertheless, that seems to be the thought behind the guillotine.
  In the House's Standing Orders, three hours are set aside for debate of a guillotine motion. However, even that may be truncated. It is the House's right, by the force of the majority, to ensure that many hon. Members who may wish to speak to these important matters cannot do so. That would be an extraordinary rejection of the very function that we are called here to perform, and of even our name—Parliament.
  I take exception to this guillotine motion, which will limit what is perhaps the most important political debate. Perhaps the debate's importance is the reason why the Opposition have been so keen to conduct it in this manner,

  665
  raising it to such a prominent position and ensuring that they maximise the Government's discomfiture on it. It is a shortsighted way of considering the matter.
  No one doubts that the principle involved in the sell-off of air traffic control is very important. The issue raises in all parties anxieties about the national interest and about who can best guarantee the security of air traffic control. Some people say that the Government can do that best, whereas others say that it can be done best by someone else. Some people ask whether there should be a golden share to ensure that air traffic control cannot be bought by foreign commercial interests and put at ransom.
  Every hon. Member knows that all those issues are important. Hon. Members on both sides of the House—but especially Labour Members—are deeply anxious about them. I do not take lightly Labour Members' feelings in voting against the principle proposed by the Government. Many of them will wish to speak in the debate to explain to their constituents why they take a different view, but the motion will deny them the opportunity of doing so.
  I have not troubled even to count the number of amendments in the first group, which—if the guillotine debate were to last three hours, plus a Division—we could have only 40 minutes to debate. If we had only 40 minutes, the Secretary of State would have barely enough time to mangle his first sentence. If the process were to continue, the Government would be denying even themselves the ability to justify their case to the House. How can that be right? It is an important argument.
  The courtesies have become so trivialised that the Government feel that it is no longer necessary even to explain why a guillotine should be introduced. Even Opposition Front Benchers do not think that it is necessary to justify them.
  Mr. Forth: Does my hon. Friend not see the connection between the point that he made initially and the point that he is making now? Presumably, the reason why our Front Benchers do not think that it is necessary to explain the motion to the House is that they believe that a cosy and consensual arrangement made in private is sufficient, and that the House should simply accept whatever our betters on the Front Benches agree. Does he agree that that is a likely reason for the lack of courtesy from Front Benchers?
  Mr. Shepherd: Before I answer that, I should first point out that Liberal Democrat Front Benchers have also signed the guillotine motion and do not think that it is necessary to justify cutting people off from speaking. The cosiness of the arrangement—which, as we all know, has been debated in the Modernisation Committee—means that Back Benchers, who comprise the overwhelming majority of the House, march to drums that deny them the opportunity to speak. It is an extraordinary arrangement.
  Dr. Desmond Turner: Does the hon. Gentleman agree that, by debating the programme motion at length, he and other Opposition Members are contributing towards the restriction of
  666
  debate in the House? If he wants to debate the substantive issue, it would be best to allow the programme motion to be put to a Division as soon as possible.
  Mr. Shepherd: I feel that the hon. Gentleman has not even read the motion before the House, and his point is unwise. He should take the matter up with his own party managers, and ask whether a debate on a substantive matter should be curtailed to 40 minutes because some obstreperous Back Bencher has argued against the motion.
  Mr. Bernard Jenkin: Both Front-Bench teams have been accused of discourtesy. My hon. Friend will know that I have enormous sympathy for what he is saying, but we were left with a choice between two evils—a programme motion or a guillotine. I venture to suggest that, in this case, a programme motion is preferable to a guillotine, as we can at least guarantee that matters of concern to this House can be discussed. Otherwise, an endless stream of mundane Government amendments could use up the time before the guillotine falls. That is why we have done this. I do not expect my hon. Friend's forgiveness, but I crave his understanding.
  Mr. Shepherd: There is no difference between a guillotine and a programme motion, other than the fact that, under a timetable motion, my hon. Friend is saying that he can more judiciously allocate the time allowed for debate. However, that does not work either, as we have one and a half hours to discuss some groupings of amendments.
  One must consider the extraordinary nature of the Bill, which weighs a great deal and covers many pages. The amendments are colossal. The House must pause; that is all I am asking. We are giving so little time to important issues, and we are reducing debate so that there is an almost mechanical passage of legislation. There can be almost no thought or reflection on the individual amendments, which are blocked, grouped and marched on.
  Previously, we had a guillotine on Lords amendments when the Government used their judgment as to the appropriate time for the guillotine. Out of 11 groupings of amendments upon which Madam Speaker had graciously decided, only four were debated. We do not even debate substantial pieces of legislation now, and that is what angers me. This House is viewed with great contempt because we just seem to be two marching armies. It is as if these are matters for party alone. However, each one of us represents a constituency. By voting to deny ourselves the right to speak on some of these important amendments, we are denying the very justification for our existence in this House.
  4.42 pm
  The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott): I intended no offence by not intervening when the motion was moved, because the three main parties had agreed. However, this is a matter for the House. The three Front-Bench teams can get together and make agreements, but the House can agree or reject them. That is what we face.
  One distinctive difference between a guillotine and this kind of co-operation on the allocation of time is that one party is not seeking to impose on the other. There is an

  667
  agreement—as the hon. Member for North Essex (Mr. Jenkin) said—to seek a better way to deal with the important issues.
  I have been in this place for 30 years and I am bound to say that I have heard these arguments from both sides. I am not unsympathetic to the points that have been made, as these are essential democratic issues. It is hoped that many of these issues can be debated in Committee where considerable time is given, but that does not deny the House the right to debate them.
  We have faced such problems before—for example, during debates on the Maastricht treaty. I do not know what the right hon. Member for Bromley and Chislehurst (Mr. Forth) thought about that, or whether he voted against the timetable motion. I presume that he did not, as he was a member of the Government.
  I have been on both sides of the Chamber dealing with the matter, and we have to find agreements in dealing with legislation. The fundamental point is being looked at by a Committee of this House which will report back to us. This is an agreed timetable, as is made clear in the motion which is signed by the three parties involved in the process. It suggests a sensible and logical consideration of the Bill, and it gives an opportunity for the Opposition to make clear those parts of the Bill that they want to discuss. I can recall several occasions when we discussed all sorts of stupid Government amendments and did not get to the serious issues until 2 or 3 am. We want to discuss the serious issues at a time when the public may be most interested to hear those discussions.
  We sought to co-operate with the other parties to devise the right timetable. With all its faults and limitations, the timetable before us represents the best way forward. It also avoids the duplication of debate and makes for speedier consideration.
  Mrs. Gwyneth Dunwoody: Will my right hon. Friend bear it in mind that many of us will feel that it is important to vote on more than one of the amendments and new clauses in the first group?
  Mr. Prescott: We are trying to find as much time as we can, and I am trying to hurry my contribution, because the longer I am at the Dispatch Box, the more I shorten the period for discussion. That is one reason why I hung back, hoping that we would not have this debate, but the House has the decision in these matters. We have provided a timetable that I believe represents the best way of dealing with the Bill, and I commend the motion to the House.
  4.46 Pm
  Mr. David Wilshire: I am very conscious that we are eating into debating time for substantive matters, but I want to make one point on behalf of my constituents, bearing in mind that the most recent crash at Heathrow took place in my constituency.
  My experience of 13 years in the House has taught me that when we have a programme motion or a guillotine and there are a given number of hours and many people want to speak, it is the matters of principle and philosophy, and the general matters of national concern, that get debated, while the local concerns of my constituents—and, in the context of Heathrow, probably those of the hon. Members for Hayes and Harlington (Mr. McDonnell) and for Feltham and Heston (Mr. Keen)—get squeezed out. With the memory of what has happened in Spelthorne, my constituents would want me to object, very briefly, to that squeezing out of their interests by other people's debates.
  Question put and agreed to.

Orders of the Day
  Transport Bill
    1ST ALLOTTED DAY
    As amended in the Standing Committee, considered.
    1ST ALLOTTED DAY
      New Clause 35

        TRANSFER TO BE TO COMPANY OWNED BY CROWN
        '.—(1) Any property, rights or liabilities shall only be transferred under a transfer scheme to a company which—

        (a) has been formed and registered under the Companies Act 1985 or the Companies (Northern Ireland) Order 1986; and

        (b) is wholly owned by the Crown.

        (2) For the purposes of this Part a company shall only be regarded as wholly owned by the Crown if each of the issued shares of the company is held by—

        (a) the Treasury,

        (b) the Secretary of State, or

        (c) the nominee of a person falling within paragraph (a) or (b).

        (3) A company to which any property, rights or liabilities have been transferred under a transfer scheme shall not issue any shares or share rights unless such shares or share rights are issued to the Treasury, the Secretary of State or a nominee of either of them.
        (4) Subject to subsection (5), neither the Treasury, the Secretary of State nor a nominee of either of them shall dispose of any shares or share rights in a company to which any property, rights or liabilities have been transferred under a transfer scheme.
        (5) Subsection (4) does not apply to any disposal by the Treasury, the Secretary of State or a nominee or either of them to any other such person.'.—[Mrs. Dunwoody.]
        Brought up, and read the First time.
        4.47 pm
        Mrs. Gwyneth Dunwoody: I beg to move, That the clause be read a Second time.
        Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss the following: New clause 36—Transfer to be to not for profit company—
        '.—(1) Any property, rights or liabilities shall only be transferred under a transfer scheme to a not for profit company.
        (2) The transfer of property, rights or liabilities under a transfer scheme may be by such means, including sale or lease, and on such terms as the Secretary of State, with the approval of the Treasury, may determine.
        (3) A transfer scheme shall not come into force unless a draft of the scheme has been laid before and approved by resolution of each House of Parliament.
        (4) A not for profit company to which any property, rights or liabilities have been transferred under a transfer scheme shall not—

        (a) issue any shares or share rights; or

        (b) pay any dividend or profits to its members.

        (5) For purposes of this Part, "not for profit company" means a company—

        (a) which has been formed and registered as a company limited by guarantee under the Companies Act 1985 or the Companies (Northern Ireland) Order 1986; and

        (b) the membership of which, in the opinion of the Secretary of State includes those who are representative of providers, employees and users of aviation, air travel, air navigation and related services.'.

        670
        New clause 37—Parliamentary approval of transfer scheme—
        '.—(1) A transfer scheme made by the CAA or the Secretary of State shall not come into force unless it has been approved by a resolution of each House of Parliament passed on a motion moved by or on behalf of the Secretary of State.
        (2) No such motion shall be moved by or on behalf of the Secretary of State unless at least seven days before the date on which the motion is to be debated by either House of Parliament he has caused a report to be laid before both Houses which—

        (a) sets out the progress which has been made in respect of any project for the development of facilities connected with national air traffic services which was commissioned by the transferor before the date on which this Act received Royal Assent; and

        (b) confirms that the Treasury have given their consent to the proposed transfer.'.

        New clause 26—Disposal of shareholding in designated company—
        '(1) The Secretary of State shall procure the disposal of at least 51 per cent. of the shares in the designated company referred to in section 49 by way of an offer to the public of such shares and shall secure acceptance for an application for admission to the Official List (within the meaning of Part IV of the Financial Services Act 1986) in respect of such shares.
        (2) The terms on which such shares are offered to the public, as to price and otherwise, shall be such as the Secretary of State considers appropriate for the purposes of—

        (a) securing the best price reasonably obtainable for those shares;

        (b) securing widespread ownership of such shares by individual members of the public as well as institutions.

        (3) Any transfer or issue of a share or shares pursuant to such offer or any subsequent transfer or issue of a share or shares in the company in question shall have no legal effect (and in particular the transferee or allottee of such share or shares shall not be registered as a member of the company or exercise any rights in respect of such share or shares) if such transfer or issue would result in the legal or beneficial ownership of a majority of shares carrying voting rights in, or control of, the company passing to a person who is not a British citizen.
        (4) For the purposes of subsection (3)—

        (a) a company shall be deemed to be controlled by a person or persons who singly or together have the right to appoint or remove a majority of the company's board of directors holding a majority of the voting rights at meetings of the board on all, or substantially all, matters or if it is deemed to be controlled for the purposes of section 840 of the Income and Corporation Taxes Act 1988;

        (b) a company shall be deemed to be controlled by a person if it is controlled by a company or companies controlled by such a person.

        (5) The Secretary of State shall give to any such company as is referred to in section 48(1) above whatever directions may be necessary for implementing the provisions of this section.
        (6) The Secretary of State shall only take action under this section or section 49 or exercise any power in respect of the transfer or issue of shares in such company as referred to in section 48(1) if he has first obtained the agreement by resolution of both Houses of Parliament.'.
        Amendment No. 421, in clause 40, page 26, line 5, leave out from "which" to end of line 24 and insert—
        'contains provisions for the transfer of—

        (a) any of the CAA's property, rights or liabilities or of all or part of its undertaking; or

        (b) the property, rights or liabilities of a company (the transferor) which is wholly owned by the CAA or all or part of the transferor's undertaking;

        to a company which is wholly owned by the Crown.'.

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        Amendment No. 438, in clause 42, page 27, line 30, leave out from "unless" to end of line 31 and insert—
        'a draft of the scheme has been laid before and approved by resolution of each House of Parliament in accordance with section [Transfer to be to not for profit company].'
        Amendment No. 452, in page 27, line 32, after "that", insert—
        'and to section [Parliamentary approval of transfer scheme].'.
        Amendment No. 439, in page 27, line 33, leave out from "force" to end of line 37.
        Amendment No. 440, in page 27, line 40, at beginning insert—
        'The Secretary of State may modify a scheme before it is laid in draft before Parliament and'.
        Amendment No. 422, in page 27, line 40,, leave out—
        'or transferee (other than the Secretary of State)'.
        Amendment No. 441, in page 27, line 42, leave out "to approve and modify".
        Amendment No. 453, in clause 43, page 28, line 12, at beginning insert—
        'Subject to section [Parliamentary approval of transfer schemes],'.
        Amendment No. 442, in page 28, line 12, after "section", insert—
        'shall not come into force unless a draft of the scheme has been laid before and approved by resolution of each House of Parliament in accordance with section [Transfer to be to not for profit company] but, subject to that requirement,'.
        Amendment No. 423, in clause 45, page 29, line 25, leave out from "scheme" to end of line 34.
        Amendment No. 424, in clause 46, page 30, leave out lines 25 to 27.
        Amendment No. 425, in page 31, line 1, leave out Clauses 47 to 49.
        Amendment No. 454, in clause 49, page 32, line 9, at end insert—
        '(2A) The Secretary of State must ensure that the Crown does not dispose of any of the shares it holds in the designated company unless he is satisfied that a scheme is in place to ensure the completion of any project which—

        (a) concerns the development of major facilities connected with air traffic services, and

        (b) was commissioned before the coming into force of this section by the CAA or a company wholly owned by the CAA.'.

        Amendment No. 397, in page 32, line 16, leave out subsection (4).
        Amendment No. 455, in page 32, line 33, after "subsection", insert "(2A),".
        Amendment No. 456, in page 32, line 35, after "subsection", insert "(2A),".
        Amendment No. 396, in page 32, line 37, leave out subsection (9).
        Amendment No. 426, in clause 50, page 32, line 39, leave out subsections (1) to (3) and insert—
        '(1) The Secretary of State, with the approval of the Treasury, may make loans of such amounts as he thinks fit to a company which is wholly owned by the Crown and to which any property rights or liabilities are transferred under a transfer scheme.'
        672
        Amendment No. 444, in page 32, line 39, leave out subsections (1) to (3) and insert—
        '(1) The Secretary of State, with the approval of the Treasury, may make loans of such amounts as he thinks fit to a not for profit company to which any property rights or liabilities are transferred under a transfer scheme.'.
        Amendment No. 427, in clause 51, page 33, line 29, leave out subsections (1) to (3) and insert—
        '(1) The Secretary of State or the Treasury, may guarantee the discharge of any financial obligation of a company (the transferee) which is wholly owned by the Crown and to which any property rights are transferred under a transfer scheme.'.
        Amendment No. 445, in page 33, line 29, leave out subsections (1) to (3) and insert—
        '(1) The Secretary of State or the Treasury may guarantee the discharge of any financial obligation of a not for profit company to which any property rights or liabilities are transferred under a transfer scheme.'.
        Amendment No. 428, in page 33, line 43, leave out subsections (6).
        Amendment No. 429, in clause 52, page 34, line 21, leave out subsections (1) to (3) and insert—
        '(1) The Secretary of State, with the approval of the Treasury, may make grants towards the expenditure of a company which is wholly owned by the Crown and to which any property rights or liabilities are transferred under a transfer scheme.'.
        Amendment No. 446, in page 34, line 21, leave out subsections (1) to (3) and insert—
        '(1) The Secretary of State, with the approval of the Treasury, may make grants towards the expenditure of a not for profit company to which any property rights or liabilities are transferred under a transfer scheme.'.
        Amendment No. 430, in page 34, line 37, leave out subsection (6).
        Amendment No. 431, in page 34, line 40, leave out Clause 53.
        Amendment No. 447, in page 35, line 27, leave out Clause 54.
        Amendment No. 432, in clause 54, page 35, line 27, leave out subsections (1) to (3) and insert—
        '(1) For the purposes of the provisions of the Companies Act 1985 listed in subsection (2) none of the persons listed in subsection (5) is to be regarded as a shadow director of a company which is wholly owned by the Crown and to which any property. rights or liabilities are transferred under a transfer scheme.'.
        Amendment No. 433, in page 36, line 8, leave out subsection (5) and insert—
        '(1) For the purposes of the provisions of the Companies (Northern Ireland) Order 1996 listed in subsection (4) none of the persons listed in subsection (5) is to be regarded as a shadow direction of a company which is wholly owned by the Crown and to which any property, rights or liabilities are transferred under a transfer scheme.'.
        Amendment No. 434, in page 36, line 27, leave out subsections (8) to (11).
        Amendment No. 435, in clause 60, page 40, line 23, leave out "47, 48" and insert—
        '[Transfer to be to company owned by Crown]'.
        Amendment No. 448, in page 40, line 23, leave out "47, 48 or".
        Amendment No. 436, in page 40, line 28, leave out "47" and insert—
        '[Transfer to be to company owned by Crown]'.

        673
        Amendment No. 449, in page 40, line 28, leave out "47 or".
        Amendment No. 437, in page 40, line 30, leave out lines 30 and 31.
        Amendment No. 450, in clause 63, page 41, line 5, at end insert—
        '(dd) not for profit company'.
        Amendment No. 451, in page 41, line 13, at end insert—
        '(2A) "Not for profit company" has the meaning given in section [Transfer to be to not for profit company].'.
        Mrs. Dunwoody: It is important to say at the outset that I have put my name to nearly all the new clauses and amendments, and I hope that the House will be able to decide on the implications of the various suggestions that have been made. I have made it clear that, personally, I do not approve of timetables. The decision about the management of National Air Traffic Services is so important and fundamental that I hope that we will have time to put all the vital points.
        The new clause suggests one way in which the electorate as a whole can be absolutely certain that the most fundamental of our rights—the right to know that air safety is in the hands of those who understand and control it—is fully taken account of in legislation.
        The Transport Sub-Committee appears to have become the villain of many of our debates. When it discussed this subject, which it did not once but on three separate occasions, it took account of the fact that there were several factors that made it clear that we could not continue with National Air Traffic Services in its current form. There was a need to change, but we thought that the suggestion that NATS should go out to the public market and find money should be examined in the context of its reorganisation.
        After all, what does NATS do? It is a fully integrated service, not only providing flight information and weather services but fundamentally controlling the movement of aircraft in the airspace over the United Kingdom, in conjunction with the Ministry of Defence. Given that aircraft use is increasing at a rate of between 5 and 6 per cent. a year and a growing number of people are using increasingly congested air space, if we allow any slippage in the high standard of safety that we enjoy, we shall contribute to a potentially difficult situation.
        The Select Committee felt that NATS should have the right to raise the money that was essential for its development and that it could best do that either as a publicly owned corporation or in the other ways that we suggested in our report. We did not feel that there was any suggestion that NATS was not capable of providing high-quality services. Not only are air traffic controllers highly trained and working under enormous pressure, but they are men and women of great expertise and they do not provide a service based on the interests of the shareholders of a particular company; their job is performed wholly on the basis of safety and they are responsible to the entire United Kingdom for the maintenance of high standards.
        Having looked at various ways in which other countries across the world have reorganised their air traffic services, the Select Committee felt that the best way to ensure that
        674
        those high levels of safety were maintained was to keep NATS either as a non-profit making company or, better still, as a publicly owned corporation. That has been made very clear.
        It is not true that NATS is not able to act as an adviser or take consultancy work from other air traffic services elsewhere in the world. I received a written answer today which makes it clear that it is already doing precisely that. It is not true that, under the new system, NATS would be able to continue operating as it does now because of something called the golden share. I am afraid that the history of Government privatisations that relied on golden shares is not that Governments maliciously set out to change the conditions under which sales take place, but that, once a strategic partner is in control of the company, it can change the terms and conditions and the way in which the company works. Safety should not depend on a fiduciary duty not to the general public but to shareholders of a particular private company.
        I recently attended a lecture where the representative of an airline made it clear what that airline's interests were in pursuing the sale of NATS, by saying to the air traffic controllers who were present, "You must remember that many of the decisions that we take have a direct impact on our commercial affairs and it is therefore essential to us that you are much more understanding of, and responsive to, the needs of individual airline companies." That was not said out of any malice aforethought, but it was a clear indication of the problem that a national air traffic services company would face.
        It is important for us to understand that, unlike airports, which can open more shops or expand the services that they offer customers, or airlines which can change the way in which they operate or offer cheaper fares, NATS has one basic and vital function—to ensure safety. It exists to maintain the safety of aircraft in the skies and as they enter and leave our airports and to control air traffic from the continent and across the Atlantic. It exists to ensure that, when we get on any aircraft, we are certain that the men and women operating the movement of those aircraft are answerable only to those who maintain high safety standards and not to anyone seeking to make a profit out of their organisation.
        I can give many instances of how the Committee looked at the details. I can answer many of the points that have been made. It is vital that the House asks itself why, before the previous election, the Labour party opposed the sale of NATS. Why did we say that our air was not for sale? It was not because it was an easy, cheap, propaganda point to attract voters but because we understood that, unlike almost any other service, this service is vital to the maintenance of safety and control in the skies over the United Kingdom.
        I beg right hon. and hon. Members not to make the mistake of thinking that a simple company reorganisation will maintain the same standards in the future that we have had in the past. Whichever of the three new clauses—35, 36 or 37—right hon. and hon. Members vote on tonight, I ask them to remember that they do so on behalf of every person in the country and, above all, that they do so for the right of the citizens of the United Kingdom to be safe for every moment that they are in the sky.
        Mr. Don Foster: Many right hon. and hon. Members wish to speak. I am delighted to follow the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) and, like her, I will be brief.

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        The hon. Lady makes it clear that the matter must be decided by the House as a whole. She will recall that, on Second Reading, a number of Labour Members brought forward a reasoned amendment in opposition to the Government's proposals. Unfortunately, at that time, they did not believe it appropriate to move the amendment. It was in fact moved by Conservative Members, and was voted upon—[Interruption.]
        Mr. Deputy Speaker: I am sorry to interrupt the hon. Gentleman, but there is some device here which is making a noise. Can it please be silenced as quickly as possible? Madam Speaker has made it absolutely clear that this is quite improper. [Interruption.] I think that I have seen the source of it.
        Mr. Foster: Before that brief interruption, I was saying that there was an opportunity to vote on the issue on Second Reading. The opportunity was not taken then, and we have it again today.
        What I believe unites Members on both sides of the House is the wish to see changes in the arrangements for National Air Traffic Services. First, I think that everyone agrees that NATS should be separated from the Civil Aviation Authority. Secondly, I suspect that everyone will see that there are benefits to be gained from introducing into the operation of NATS expertise from the private sector, particularly in relation to management. Thirdly, I suspect that we all agree that there is an urgent need to find ways of enabling NATS to gain funds for future investment, preferably without such funds coming within the public sector borrowing requirement.
        I believe that the House is united on those three points. The question therefore is: what is the most appropriate way of ensuring that NATS continues to operate as it does at present, as an organisation that has safety as its No. 1 priority? There are a number of ways of moving forward. The Government have proposed a part-privatisation model. The Conservative party has in the past proposed a complete privatisation model. The model that Liberal Democrats believe to be the most appropriate way in which to achieve the three key objectives to which I referred, and of ensuring that safety remains the paramount issue for the future of NATS, is by establishing an independent, publicly owned company. As we argued strongly in Committee, that particular model would enable the separation of NATS, the introduction of private sector expertise and the ability to raise funds, while ensuring that safety remained the key issue.
        5 pm
        The Government's proposals have attracted criticism from many quarters. The hon. Member for Crewe and Nantwich has rightly referred to the work of the Transport Sub-Committee, which has issued three reports on this issue. On one occasion, the Committee had a majority of Conservative Members; on two occasions, there was a majority of Labour Members but, each time, the Committee came to the view that the most appropriate way forward was certainly not the one proposed by the Government.
        The proposals have also been criticised by airline pilots; they should know—perhaps better than anybody else—about the issues. The British Air Line Pilots Association has been implacable in its opposition to
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        the Government's proposals. The national air traffic controllers, through their union, the Institution of Professionals, Managers and Specialists, have consistently and implacably opposed the proposals. The Parliamentary Advisory Council for Transport Safety is clearly opposed. I hope that there will be opposition from a large number of Government Back Benchers. The proposals certainly do not meet the requirements of the Conservatives nor the requirements and desires of the Liberal Democrats.
        On a free vote, there would be no chance whatever that the Government's proposals would go ahead. The hon. Member for Crewe and Nantwich said that the matter was of such vital importance to the public at large that the whole House must decide on it. I very much hope that the Government will ensure that there is sufficient time to vote on new clauses 35, 36 and 37 and that the vast majority of Members on both sides of the House will vote for each of them.
        Dr. Gavin Strang: Like the hon. Member for Bath (Mr. Foster), I served on the Standing Committee. We are discussing hugely important issues. As he pointed out, the Liberal Democrat members of the Standing Committee supported a publicly owned corporation as an alternative to the Government's proposal. That is what new clause 35 would provide.
        In her usual powerful and persuasive way, my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) argued that the new clause would meet some of the Government's concerns that the service should borrow directly in the private sector.
        New clauses 35, 36 and 37 contain three separate propositions—I shall say a few words about each. New clause 35 deals with the independently owned public corporation. New clause 36 provides for the setting up of a trust along the lines of NAV Canada. Such a trust would include representatives of the airlines, the users, the customers, the trade unions and all who have an interest in the matter. If an independently owned public corporation is not acceptable to the Government, the trust would offer a way of meeting their objectives.
        The third proposition—in new clause 37—is quite different. If the Government are not able to accept either of the other models—although I hope that they will accept one of them—surely, at the very minimum, they would agree that we must not take the privatisation route until the new centre at Swanwick and the new Scottish centre at Prestwick are operational.
        Those are the three propositions before the House. If the Government are not able to accept them, it is vital—as my hon. Friend the Member for Crewe and Nantwich said—that the House is able to vote on each of them. It would be a travesty of democracy if we were not able to vote separately on each provision. I trust that there will be co-operation to do that.
        My hon. Friend dealt with the models for an independent publicly owned company. Such a trust would achieve the Government's objectives because it would split NATS from the Civil Aviation Authority, and allow it to borrow in the private sector and—if the Government want this—to invest overseas. It would achieve all those objectives, so I hope that the Government will be able to accept one of the two models proposed.
        If one of those models is not accepted, it is vital that, at the very least, the Government do not move towards privatisation before the Swanwick and Prestwick centres

        677
        are operational. However, I emphasise that I think that it would be a great mistake to go ahead with the partial privatisation.
        As we have been reminded, it was not just anyone but an all-party Select Committee that said that the option in the Bill was the worst of all possible options. Why has no other country in the European Union or the world privatised its air traffic control system? The prime reason, I suggest, is national security. Fortunately, the domestic civil security risk has not been great recently, but the risk of hijacks or bombs on civil planes remains. If the system is publicly owned, there will be better co-operation with the police and the security services than if it were run—this is what the Government intend—by a private commercial company.
        The other aspect of national security is the military. The co-operation between National Air Traffic Services and the Royal Air Force is a model for the world. An international crisis could emerge and we might want to take complete control of our airspace. The Government might be clear that that is what they want to do, but control of the operation could remain with a foreign company. That is possible under the Government's proposals and the aims of that company in such a crisis might be different from those of the British Government. No other country in Europe has privatised its air traffic control system because of such national security considerations. To secure maximum co-operation with the security services, the police and the Ministry of Defence, it is best to retain the system in public ownership.
        My hon. Friend powerfully made the case for the second model. Privatising the air traffic control system is not like privatising an airline. A privatised airline can provide additional services, improve in-flight catering and do all sorts of things to maximise the return on the capital deployed so as to obtain more private profit. Air traffic control is all about keeping planes apart, but a private company would want a greater return on the capital deployed—Ministers have said that that is the intention—and it would extract profit from the system for private shareholders. The worry is that the only way that it could achieve that is by driving down costs. In time, that could impact on our safety standards, which have been the highest in the world.
        The Government have not persuaded the travelling public and many Labour Members and they have not persuaded the pilots or air traffic controllers. The key dialogue in air traffic control is that between the pilot and the air traffic controller, and the Government would make a great mistake if they proceeded with a policy that is opposed by airline pilots.
        I urge the Government to reconsider and accept one of the alternative models—the independent publicly owned company or the not-for-profit trust.
        Mr. David Chidgey: I shall not detain the House long, but I wish to point out how much I agree with the views expressed by the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), who moved the new clause, and the right hon. Member for Edinburgh, East and Musselburgh (Dr. Strang). I was reminded very much of the previous Parliament in which I had the privilege of being the Liberal Democrats' spokesman on transport and
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        I sat on the Opposition Benches with Labour Opposition. Members on the Opposition Benches at that time were in total agreement that we should not sell off NATS, so it is strange that this Government now subscribe to the views of the previous Government. I find that rather sad. It is a shame that the Government have not found time to reassure the House by explaining why things have changed since they were in Opposition and since Labour made pledges at its annual conference. I accept that it is entitled to make pledges and that it is a part of politics to do so. However, why have the Government not told the House why things have changed and why it is not possible to maintain their pledges? Why is the organisation for sale when it was not previously? It is disreputable that the Government have not had the confidence to explain to us as a body why we should see the way forward from their point of view.
        I have always subscribed to the view that we should bring in the private concepts of an independent publicly operated company. That is a way of introducing the necessary cash flow and revenue. However, we have never seen the need to privatise the system merely to provide more money and to put the operation of National Air Traffic Services and safety at risk.
        My final point is constituency based. Some Members may realise that the Euro centre at Swanwick is just over the border of my constituency. I am sure from correspondence that I have had with many of my constituents who work at the centre that they were not expecting to see such a policy. They are genuinely concerned about how they can maintain levels of safety in their work that keep airline operators and airline passengers confident within the proposed regime.
        I am not raising party political points. Instead, I am referring to genuine concerns that are felt by people who are highly professional, highly trained and extremely responsible in what they do. I ask the Government to listen carefully to the views of that body of opinion, which has no political axe to grind. It merely wishes to continue to serve the public to the best of its ability.
        Ms Sandra Osborne: I support amendment No. 454, which stands in my name. It would have the effect of ensuring that major planned development by National Air Traffic Services must be completed. I have a specific interest because, as most Members are aware, the new Scottish centre, which will secure 700 jobs, is in my constituency. As the issue is of such importance to my constituency, I am prepared to prioritise it over other issues. I have to insist that the Government support my amendment, otherwise I shall be unable to support the Government.
        I have spoken about NATS on numerous occasions. I have raised many of the issues of concern that have been brought to me by constituents and by representatives of trade unions and the work force at Atlantic house. Ministers are well aware that the proposed public-private partnership does not meet with the approval of the work force for many of the reasons that I stated on Second Reading, which have been repeated this afternoon.
        I shall concentrate my comments on the repeated suggestions, especially over recent weeks, that the new Scottish centre will not come about if the public-private partnership goes ahead. I have questioned Ministers on numerous occasions. My right hon. Friend the

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        Prime Minister has twice publicly reiterated his commitment to the two-centre strategy. As recently as last week, he said that the strategic partnership agreement would guarantee the construction and the continued operation of the new Scottish centre at Prestwick. That was his reply to my question.
        As I stated on Second Reading, the work force at Prestwick does not believe that the centre will go ahead. That is hardly surprising because there has been a chronic lack of investment in NATS for many years. That was underpinned by the failed attempts at full-scale privatisation that were made by the Conservatives. I do not believe that the new Scottish centre would go ahead with full privatisation, and neither does anyone else. The period during which no progress has been made in building the centre has resulted in cynicism among the Prestwick work force.
        It was announced in 1993 by the Conservative Government that the project would go ahead on the basis of a private finance initiative, but there is still nothing on the ground. The PFI turned out to be unworkable. It would have cost at least twice the original budget of £200 million. It has had to be abandoned in spite of the best efforts of the Government to make it work, along with NATS officials. As hon. Members have said, since then, various Select Committee reports have been published, and the Government have conducted a consultation on the future structure of NATS. The initial contract was signed during that period and £60 million of public money has been released to fund the first phase of the contract. However, there is still nothing on the ground.
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        The first phase will consist of building a software system, some design work and eventually, a little initial building work. It is well known that a strong body of opinion in NATS itself feels that there is not any special need for the Prestwick centre. That, too, stems from the previous Government, who called into question the two-centre strategy and asked for a review, which concluded that the two centres were needed. The Labour Government accepted that when they came into power and have made a strong political commitment to providing the centre in Scotland as a replacement for the present facility at Prestwick.
        I repeat this evening what I have already told my right hon. Friend the Secretary of State: that is exactly what the people of Scotland expect from a Labour Government. However, it is also feared that a strategic partner will, at some point in the future, renege on the commitment to the two-centre strategy because of the cost and need for profit. There is also anxiety about future contraction of the number of air traffic control centres in Europe. From the outset, I have said that my priority as a local Member of Parliament is securing the 700 jobs in my constituency. For three years, I have made a robust case for considering the options that are proposed in the new clauses.
        However, it is clear that the Government intend to proceed with the public-private partnership for National Air Traffic Services. In the circumstances, I am sure that colleagues will seek further assurances on various aspects of the proposals. Indeed, I know that there have been discussions, especially on safety. When the partnership was first proposed, I made an undertaking to ensure that the views of the work force were heard in government.
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        No one in government, from the Prime Minister down, can deny that I have made every effort to represent those views.
        At this stage, I wish to ensure that the new Scottish centre is secure now and in future by asking the Government to go a stage beyond guaranteeing the two-centre strategy in the strategic agreement. I hope that Ministers are minded to accept my amendment, which would entrench the new Scottish centre in primary legislation and enable me to do what my predecessor, Phil Gallie, totally failed to do: secure 700 highly skilled jobs at Prestwick and £25 million for the Ayrshire economy.
        Dr. Desmond Turner: First, I want to reinforce what several hon. Members have said to the Secretary of State: no one questions the need to move NATS forward. The Government's agenda on creating investment, levering in private finance and updating the system is accepted without question. It is simply a matter of how we set about doing that.
        In opposition, Labour Members rightly poured scorn on framework legislation introduced by Tory Governments that did not say what it would really do. Similarly, it is a source of regret that the Bill does not say what it will do, although we all know. Hence new clause 37, which would have the virtue of requiring proposals for NATS to be brought to Parliament for a vote by both Houses before any transfer could take place. That practice is the backbone of democracy.
        Why are so many Members of Parliament objecting to the public-private partnership? Those objections are not restricted to Labour Members, but are reflected in the views of many Opposition Members.
        Basically, as my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) said, the objections boil down to safety, safety and safety again. NATS's whole reason for existence is to promote safety, and so far, nothing has been allowed to stand in the way of that, the result of which has been the development of a safety culture in NATS of which we can all be proud. It is the fact that the men and women working in NATS want it to be safe that makes it safe.
        The Government have said that safety will be kept in public hands through the separation of regulation, but I have to tell the Secretary of State that that does not mean much—first, because regulation has effectively been made separate already, and taking NATS out of the CAA merely formalises that arrangement; and, secondly, because, as we all know from recent rail tragedies, the fact that safety regulation exists does not guarantee safety. Nothing can truly guarantee safety, but we can try to get as close as possible to guaranteed safety; whether it is achieved depends on whether the overriding culture of the organisation is the promotion of safety.
        Mr. Mark Todd: My constituency borders East Midlands airport; indeed, my home lies under the flight path. At that airport, air traffic control is handled entirely by the private sector—by the owners of the airport, which is a large and growing international airport. Should I be concerned?
        Dr. Turner: I am glad that my hon. Friend has made that important and valid point, but it does not undermine the case against the PPP. East Midlands is a relatively

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        small airport that has relatively little traffic movement compared with major airports such as Heathrow and Gatwick. NATS controls more than 70 per cent. of passenger movements by air in this country. It also controls all en-route cover. Finally and most importantly, NATS sets the standard that private air traffic control operators at less major airports have to follow. I am saying, not that my hon. Friend's constituents should feel unsafe, but that they might not feel as safe if NATS were privatised. Therefore, my hon. Friend's point does not undermine my argument.
        Mrs. Maria Fyfe: Has my hon. Friend seen a letter in The Guardian from Paul Noon, the general secretary of the Institution of Professionals, Managers and Specialists, in which he points out that 87 per cent. of passengers at all UK airports are handled by NATS?
        Dr. Turner: I thank my hon. Friend for that intervention—I had not seen the letter, which underscores my argument.
        At issue is not whether NATS should be moved forward, but the means by which we finance its development and the mode of governance we establish. We are all happy to lever in private finance and get NATS out of the public sector borrowing requirement, so that public funds can be used for other priorities. That is fine; no one in the House cavils at that for one moment. However, there are plenty of alternative ways of skinning this cat, and two of them are before the House in the form of new clauses 35 and 36.
        Either of those proposals will suit the situation. They have their different merits; we know, for a start, that the trust model, as exemplified by NAV Canada, works. It has been in operation for several years, it has been highly successful, it has raised safety standards, and the costs of air traffic control in Canada are falling. As far as anyone can tell, it is totally successful. Such a model would achieve all the things that the Secretary of State wants, and would not bring the profit motive into conflict with safety.
        It has been said in this argument that people who are unhappy with the public-private partnership are unhappy for ideological reasons. I assure the Secretary of State that that is not so. I am perfectly happy with PPPs. One does not hear a great deal of complaint about such partnerships for hospitals, because people want their hospitals. However, we do not ask the PPP building consortium for hospitals to supply specialist medical services—do we?—because that is obviously not appropriate.
        Happily, my constituency is benefiting from PPPs for schools. That is great; I am very glad—it is the only way to get those schools that quickly. However, nobody is asking the building consortium to do the teaching—are they? A PPP is proposed for the tube, but operation of the tube, as the Secretary of State clearly said, is to remain in public hands. The Secretary of State was most emphatic about that, and safety was one of the considerations. If that argument is good enough for the tube, if safety is critical to the tube, it is doubly critical for the much more complex matter of air traffic control.
        It has been argued that because airlines are private, and fairly safe, the Government's proposal must be all right. Of course, if one does not think that an airline is safe, one
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        does not have to fly with it. One flies with an airline that has a good safety record. One can choose one's airline, but one cannot choose one's air traffic control service. That is the difference.
        I end by making a plea to the Secretary of State. The conflict between the profit motive and the safety culture, which is inevitable in the structure that he is proposing, need not arise. Does he understand that, although many Labour Members will support the amendments and new clauses—effectively voting against the Government—most of us are extremely loyal Government Back Benchers, and it is a matter of great pain to us to find ourselves forced into so doing? Personally, I am satisfied that the PPP, as set forth, involves a very serious possibility of endangering lives in future. My conscience will not permit me to ignore that. I fancy that the same is true of many hon. Members.
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        Mr. David Wilshire: I had not intended to speak until I heard the hon. Member for Brighton, Kemptown (Dr. Turner) express my fears. The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) began the debate by making clear what I regard to be the fundamental issue at stake: safety.
        During the debate on the timetable motion, I reminded hon. Members who were present that the most recent crash at Heathrow was in my constituency. Because of that, and because of the seriousness of the issues raised by the hon. Member for Kemptown, I have not the slightest wish to play party politics in the debate. I believe that I speak on behalf not only of all 23,000 of my constituents who voted for me at the election, but of all 19,000 who voted for the Labour party, and all 6,000 who voted Liberal Democrat. I am convinced that we all see the matter in the same way.
        I shall not make a speech. I merely ask the Secretary of State one clear, simple question, which I shall be eternally grateful if he will answer in an equally simple and straightforward way, so that all my constituents can be clear about what the Government are proposing. The question is this: will the Secretary of State's proposals make things safer for my constituents? That is all they want to know. All the other arguments are peripheral to the question whether they will be safer if the Secretary of State's wishes prevail tonight. I should be grateful if he would give me a clear answer when he responds.
        Mr. Todd: I shall be brief. My difficulty in the debate has been the focus on safety and the direct relationship of that argument to the question whether the private sector controls any part of the service. As my intervention indicated, that is partly based on my local experience.
        I should declare that my brother-in-law is an air traffic controller who works for the private sector. I have spoken to him about his role and he has given his opinions, which have had little bearing on mine. Nevertheless, I have listened to someone who had some expertise in the matter.
        Clearly, although the 13 per cent. mentioned by my hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) is correct, in many instances the private sector provides the totality of the air traffic control service at particular airports—not for the en-route traffic, but at particular airports. I cannot see why there is an objection to the introduction of private finance to other aspects of the air traffic control service.

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        Aircraft are constructed and maintained by the private sector, and airports and airlines are run by the private sector. The air services are controlled by the private sector now.
        Mr. Tam Dalyell: East Midlands is an important airport; so is Edinburgh airport. The pilots tell us that there is no problem going into Edinburgh, Glasgow or East Midlands. The problem is going into the fourth busiest airport in the world—Gatwick—and the busiest airport in the world—Heathrow. The issue is control over the overcrowded skies on the approach to the city of London.
        Mr. Todd: I thank my hon. Friend for that intervention. He qualifies the position somewhat, by saying that it is a matter of the scale of the operation, not the principle involved. That is a useful development.
        My concern is about the emphasis that has been placed on safety as the overriding reason for excluding private sector finance. As I said, we already have plenty of examples of that in the provision of air services in this country.
        Mrs. Dunwoody: I am grateful to my hon. Friend for giving way. Does he seriously think that if there is a legal duty on air traffic controllers to consider the interests of their shareholders, they will behave in exactly the same way as if they have a responsibility to consider only the safe passage of air transport in the United Kingdom?
        Mr. Todd: I thank my hon. Friend. I worked in the private sector virtually all my working life, and I never regarded myself as having a legal duty to have regard to the shareholders. I had a legal duty to carry out the tasks given to me. I was not involved in the safety aspect, but I also had a responsibility to my own conscience. I would not expect that to be overridden in any circumstances.
        Dr. Desmond Turner: Will my hon. Friend give way?
        Mr. Todd: I am being more generous than others, but I shall give way.
        Dr. Turner: I am grateful to my hon. Friend for returning the compliment. The debate is not about private finance per se, because there is no specific opposition to the use of private finance. The debate is about private, for-profit governance. I hope that my hon. Friend will deal with that point.
        Mr. Todd: Indeed. I would have preferred a debate about the relative merits of the Government's model in ensuring corporate governance to focusing on safety as the key aspect of our discussions. My hon. Friend has begun to move in that direction, and that is welcome. There are genuine questions about which model produces the best means of modernising NATS.
        I am inclined to support the Government's approach because of the prospect of more robust management in the service, based on the new en-route centre project. I have long held the view that the management of highly complex technology projects in the public sector has been almost universally poor. We must tackle that problem, and that is the second reason for my support for the
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        Government's position: it offers a better prospect of producing successful, high-technology control systems for our airspace.
        I have listened carefully to the debate, and I have read the Select Committee report, which was informative. However, none of the arguments deals with the points that worry me. First, the private sector in this country already has safety models. I do not believe that I should return to my constituency and tell my constituents that they should be alarmed by the prospect of the private sector controlling the airspace over their homes.
        Mr. John Smith: My hon. Friend has been generous in giving way. Does he know that NATS operates in a private environment at some airports and provides not only air traffic services but Ministry of Defence and en-route services, albeit not on the scale of the operation at Gatwick?
        Mr. Todd: That is an important point. Many services that NATS wins—that is a key word—in a competitive tendering process, are won on a commercial basis. They are subject to commercial contracts, which the relevant airline operators award.
        My short contribution has lengthened because of interventions, but I have tried to make the point that the private sector model is not a problem per se. However, I shall listen to the rest of the debate carefully and learn from it, because I am interested in the model that will best produce a modern and effective air traffic control system to secure as far as possible—it cannot be guaranteed—the safety of air travellers and those who live near flight paths.
        Mr. Martin Salter: After 18 months of imploring Ministers from the Prime Minister down to reconsider plans to privatise the control of this country's airspace, I am sad to face the prospect tonight of voting against my Government for the first time to keep faith with a clear pre-election pledge that I gave my constituents and that the Labour party gave the public.
        Government is a messy business; it is about doing what works, making compromises, listening to a broad range of views and acting accordingly. In my short time in this place, various Bills have received a bumpy ride, not because of the tactics of Opposition Members, much as they would like to believe that they were responsible, but because of the legitimate anxieties of the Government's supporters. I am thinking in particular of lone parent benefit, welfare reform, the Freedom of Information Bill and the Immigration and Asylum Act 1999.
        In almost every case, the Ministers in charge listened carefully to the concerns and, after due modification, we ended up with better legislation and a happier parliamentary Labour party. I regret that I am unable to report any such substantial progress on the private-public partnership for National Air Traffic Services. In fact, there will be no partnership and the Bill alarms us even more because the Government propose to sell off 75 per cent. of NATS shares. That is some partnership—a 75:25 split. It is nothing short of privatisation and it breaks the bond of trust that we made with the electorate, the travelling public and the men and women who gave us the finest, most efficient and safest air traffic service in the world.
        I have listened to the arguments about private finance and will deal with them later, but I must tell those who laud the fact that non-NATS staff in the private sector

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        handle a few air traffic movements that the logical extension of that argument is full-scale privatisation of the service, not a part privatisation. If that is what people want, they should say so.
        I thoroughly endorse the new clauses, especially new clause 36, which proposes the trust model. I want to examine briefly the case against the Government's proposals and in favour of establishing that trust, as recommended by the Labour-dominated Transport Sub-Committee. Several cases can be made against the PPP, even in its 49 per cent. form. There is a political case: it clearly breaches the spirit of what we said before the election. There is strong opposition in the House and the country. The last opinion poll data showed that 72 per cent. of the public oppose even the partial privatisation of NATS. This is a matter of trust in more than one sense.
        There is an economic case against the PPP, even in its original form. As the Select Committee report and all the other data made clear, aircraft movements have increased by 7 to 8 per cent. year on year. The industry is highly profitable, but it is a safety industry. In 1998–99, it returned pre-tax profits of £64 million. In many years, it has returned a surplus to the Treasury of between £30 million and £40 million. We shall forgo that if we go down this road. The capital receipt, at the upper end of the estimates, would perhaps be some £600 million. Let us set that against the Budget surplus and the increased revenues to the Exchequer, which we all welcome.
        There is a safety case, but I shall not emphasise it. Perhaps it has been emphasised too much—my hon. Friend the Member for South Derbyshire (Mr. Todd) nods—and there are powerful political, economic and military and defence cases against the proposal. Our airspace is controlled by the public sector—not from East Midlands airport—so there is a tremendous sharing of military intelligence and information with the armed forces and our NATO allies. Imagine what would happen if we sold off 75 per cent. of the shares in our airspace to, for example, a Serbian-owned company. Imagine the reluctance to undertake the military co-operation that served us so well in the Balkans conflict.
        The Government have clear objectives—I have always said that they are entirely laudable—but we desperately need the lateral thinking to deliver those objectives without breaching a pre-election pledge and without the dangers of privatisation. They rightly want to take NATS out of the public sector borrowing requirement. They want it to break free from Treasury orthodoxy. We have achieved that with the Post Office; we can deliver it with either of the models in new clauses 35 or 36.
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        The Government want to deliver an investment stream. We all want to do that, and it can be done by means of either the trust or the IPOC—independent publicly owned company—model. We want to achieve a separation in respect of the CAA and the operational requirements of NATS. In effect that happens already, but hon. Members should bear in mind the fact that the CAA lays down only the minimum standard, while NATS operates far above that standard. It is dishonest to suggest that we are providing a safer service as a result of that separation. If we returned to CAA standards, we would be delivering a worse service, so that argument does not stand up.
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        Yes, we need private-sector management. I am not an ideologue in that regard. I have taken on colleagues in this place who have argued for the return of the Atomic Weapons Establishment at Aldermaston to the Ministry of Defence, which is the last organisation that should run it. It is a question of who runs the service best. How do we achieve the balance between public concern for public safety and the dynamism of private-sector management? The answer lies in the Select Committee's recommendation of a "not for profit trust".
        What will the trust model deliver for us? It will certainly deliver the cash. It worked in Canada, which established NAV Canada in 1995. NAV Canada operated successfully for more than five years, and in the first year delivered from the banks and the private sector an investment stream of $3 billion. The trust model works. It does not compromise safety; it is not subject to takeovers by foreign banks, foreign powers, foreign nationals or Asil Nadir—or any other person in the queue to fund the Tory party. It delivers accountability. It is outwith Treasury rules, so there is no need to compete for hard-earned public resources for schools, hospitals, firefighters and so on. It is politically in line with what we are achieving following our pre-election pledge. Perhaps most tellingly, it has support from surprising quarters.
        If the government had decided to adopt this trust model, I doubt there would have been any opposition from the CAA or NATS.
        Who said that? None other than Mr. Bill Semple, NATS chief executive, on 22 March 1999. So there we have it: the case for the trust, and the case for keeping our bond of trust.
        For the last time, I implore the Government to think again. The case for privatisation has not been made. The Government have not only lost the argument, but failed to take with them the air traffic controllers and pilots on whom our lives depend when we take to the skies. They have failed to convince the public, 72 per cent. of whom are against the proposals, and they have failed to convince their supporters in this place. Only as a result of the legitimate work of the Whips, to whose efficiency I pay tribute, will Members go into the Lobby to support the Government's proposals—in many cases against their better instincts, and in many cases against their consciences. I know that, because I have had conversations about the issue for months.
        The safety of the skies, and the safety of my constituents who live under the Heathrow flight path, is too important to be sacrificed on the altar of political virility. This is a privatisation too far—for goodness sake drop it, and drop it now.
        Mr. Sam Galbraith: I want to concentrate on amendment No. 454, tabled by my hon. Friend the Member for Ayr (Ms Osborne), but first let me make a few comments about the debate that has taken place so far.
        Clearly, everyone agrees that the status quo is not an option; the question is, what is the best model to choose? I have listened to some of the arguments against the Government's proposal. The security argument struck me as slightly tenuous and dubious. I have attended debates on similar issues, and security red herrings have always featured. As I consider the argument advanced today to be such a red herring, I shall not say much more about it.

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        The safety argument is valid, in that we must not do anything to compromise safety. However, I was rather turned off the safety argument when we got into the debate about only 17 per cent. of air traffic control being in the private sector. I did not quite follow the logic of saying, "If it is a small place, you could have a profit motive, but if it was a busier place you could not." I did not quite understand. That seems an argument about numbers. It might be about the experience on staffing levels, but it did not seem to be simply about private ownership. That was one of the things that swayed my mind.
        Mr. Dalyell: The trouble is what the pilots who are going into Gatwick and Heathrow believe. All we can report is that they believe that overall control gives them the confidence in a stressful situation.
        Mr. Galbraith: Belief is an important factor that we should always consider, but belief is not necessarily fact. People used to believe that the world was flat, but that did not make it flat. Therefore, people's belief is a different issue in these matters.
        I do not have to go through all the arguments that people have.
        Dr. Strang: Like many of us, my hon. Friend probably flies into Heathrow quite a lot. If he were to stand on the A4 on a Sunday evening, look up in the sky and see all the planes queueing up and coming into the airport, he would realise that there is no comparison between the challenge faced by the aircraft traffic control system there and that faced by some of the small airports. However, it is not just about Heathrow and Gatwick; it is about all the en-route traffic that is the responsibility of NATS.
        Mr. Galbraith: I agree. There is no comparison. There is a difference, but the principle that I have been hearing is that if the service is privately owned, there is a threat to safety and, if it is publicly owned, there is not. It should apply across the board. It is not something that we can start chopping up, saying, "It depends on the amount of aircraft that goes in or out." What is the level? Fifty per cent? Seventy-five per cent?
        Dr. Desmond Turner rose—
        Mr. Galbraith: I have obviously started a debate.
        Dr. Turner: Does my hon. Friend agree that it is vital to control any form of risk and we are dealing with a highly safety-critical area? At present, in, if you like, meaningful large-scale air traffic control—which sets the standard—there is no risk element from profit motive coming into contest with the safety prerogative. Pressure on air traffic control systems can only increase; the risk elements can only increase. Is it not unwise to introduce another potential risk element to the equation?
        Mr. Galbraith: Again, I do not quite follow the logic. Risk will vary with any reason. If it is risky at one level, it is risky at the other. Degrees of risk might vary, but I do not follow the logic and where the dividing line comes.
        Mrs. Dunwoody: Will my hon. Friend give way?
        Mr. Galbraith: This is amazing. I am more than delighted to give way to my hon. Friend.
        Mrs. Dunwoody: If my hon. Friend were operating in a private hospital as a neurosurgeon and were told that it was more important that he operated much more
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        frequently to make a bigger profit, would he rather operate in a private, profit-driven hospital or in the national health service?
        Mr. Galbraith: The thing that controlled my work in the public sector was laziness because I could not be bothered working too much, so I will just leave it at that.
        I drive home the point. What is the level of traffic that makes it dangerous to be owned privately, but not to be owned publicly? Let us have a figure. [Interruption.] Much more than could be coped with? What level is much more than could be coped with?
        Mr. Michael Connarty: One more.
        Mr. Galbraith: That is a false logic.
        On the argument that the service must be publicly owned for safety reasons, I do not have to go through all the various examples, but the publicly owned Chernobyl comes to mind. I do not think the argument follows.
        May I move on to say a few words on behalf of the amendment tabled by my hon. Friend the Member for Ayr? I hope that the Government will consider accepting it. The whole matter has been dogged for a number of years—it was particularly the case under the previous Government—by a lack of commitment to the two-centre strategy. It has constantly cropped up. The issue has arisen again. It is producing great uncertainty and doubt in Ayrshire, including in my hon. Friend's constituency. She is to be highly commended for, and congratulated on, her sterling work for her constituents and on fighting for jobs and investment, something which her predecessor never did, or was not capable of doing. I hope that we can lay the issue to rest and build the provision into the fabric of the Bill, so that the matter can no longer be used as a red herring.
        The question of how best to operate the service is a difficult one. Everyone is agreed that the status quo is not an option. I happen to think, particularly having listened to the debate and the false logic involved, that the Government have got it right. That is why I will be happy to support them in the Lobby.
        Mr. John McDonnell: I speak from a constituency interest, as well as from a party interest, I suppose. Heathrow is in my constituency. Many of my constituents live under the flight paths. Many of them work at Heathrow, so I have a direct constituency interest and in no way apologise for raising the issue of safety again.
        Not a single constituent in my constituency with any involvement in the aviation industry supports the proposal. I have consulted at length within my community. I have met not just trade unions, but members of the community who have worked in the industry for a long time as individuals. I have met air traffic controllers.
        We gave commitments before the last general election. Letters went to some of my constituents informing them that the air was not for sale. They believe that a singular act of political disingenuity is being done today.
        Air traffic controllers in my constituency have served the country well. They have given us possibly the safest form of transport over the years and the safest aviation industry in the world. Our amendments seek to retain

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        NATS as a public service in some form. They try to commit us to the promise that we made before the last general election.
        The proposal will enable NATS to operate within a commercial structure that will provide the commercial freedom that the Government seek and that the Deputy Prime Minister considers desirable. It is not an argument for the status quo. We have already dealt with that discussion. We all accept the split between the CAA and NATS. It is a compromise; both the IPOC—the independent publicly owned company—and the trust are compromises. It is a desperate plea from me and from many of my comrades and constituents.
        Last Thursday, at the London elections, I met lifelong Labour supporters who were not voting Labour for the first time in their lives. We had a virtual strike among campaign activists because we had stopped listening to them. The amendments are a plea to the Deputy Prime Minister and others to listen to what our people are saying. They do not want any further privatisations. No matter how much we try to dress this one up—I have put the arguments—whether it be as a part sale, a public-private partnership, the introduction of commercial disciplines and incentives or whatever, the general public and Labour supporters in particular throughout the country view it as a privatisation and—I echo what has been said—a privatisation too far. They are right because, as has been said, we now find that, in the legislation, the potential private sector stake is not restricted to the initial allocation of shares.
        When we discussed that before, I was anxious about only 49 per cent. being retained by the Government. Five per cent. was to go to staff and 46 per cent. to the private sector, but, in future, according to the legislation, there will be no restriction on the privatised NATS issuing further shares to raise finance. The only bottom line on the eventual size of Government shareholding is 25 per cent. At that point, 70 per cent. of shares will be in the hands of the private sector. I call that privatisation; I believe that most people will believe that it is full privatisation.
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        As for employee shareholding, yesterday, in a letter from Lord Macdonald, we were informed:
        Staff shares can only be sold to other staff or a staff trust.
        I cannot find anything in the Bill that guarantees that.
        After a certain time, 75 per cent. of the shares could be in private hands. The private hands could be those of the private sector strategic partner that the Deputy Prime Minister has prayed in aid in supporting the legislation, the Airline Group. Eventually, that group could possess control.
        Mr. Peter L. Pike: Is my hon. Friend aware that, when the Trustee Savings Banks Act 1985 was passed, certain time-limited safeguards were provided on the maximum size of any one shareholding? Once those safeguards lapsed, the entire shareholding situation changed, and, very rapidly, TSB went with Lloyds.
        Mr. McDonnell: My hon. Friend is an experienced Member. He makes a valid point and offers a history lesson that we should all bear in mind as we debate the proposal.
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        As I said, the Airline Group has been prayed in aid in support of the proposal. Of course it supports the proposal. It could gain control not only of the NATS company, but of the air itself. A few months ago, in The Observer business section, a leak revealed that the beneficent, altruistic Airline Group, which wants to become the key shareholder under the proposal, has initiated a discussion on how the airlines comprising the group could receive preferential treatment and access via NATS, which they would jointly own and control. I believe that the Airline Group is proposing a physical and financial cartel. The legislation, however, contains no provision to prevent such a cartel from being created.
        Interestingly, yesterday's letter from Lord Macdonald reveals that, although the Government are willing to countenance a NATS board where the private sector may have 75 per cent. control, there will be no representation on it for trade unions. Instead, trade unions will be offered a stakeholder consultative council in which they will be but one interest among many. That is not a partnership, but a sell-out. It is a takeover.
        I make no apology for raising the safety issue. After the railways were privatised, we had Southall and Paddington, which is down the track from my constituency. I lost constituents. Those disasters put beyond doubt the link between privatisation and public safety. The public sector should have the preponderant role in guaranteeing public safety. In the past fortnight, we have even had reports of complaints about private bus companies' safety policy in recruiting drivers.
        In this debate, we have discussed balances of proportionality in safety. Just to put it beyond doubt, the fact is that those who know the aviation industry tell us that there are doubts about safety in the private sector. In 1999, the Environment, Transport and Regional Affairs Committee reported on aviation safety, and it drew the Government's attention to the safety risks posed by commercial pressures in the aviation industry. I invite hon. Members to read that report, which states:
        in spite of the protestations of the airlines that "safety [is] our most important priority…[we] do not seek competitive advantage as far as safety is concerned", concern remains that in the event of conflict between safety considerations and profit margins, airlines may favour their profit margins.
        Aviation safety is already a concern.
        In theory—let us get the theory right—there is a view that commercial pressures within a privately owned company create risks to safety. It does not require a great theoretical leap to understand why. A private company's first priority is profit; every other factor is secondary and short term. The public-private partnership needs to produce a return for its shareholders. The company will not be able to increase charges, so profits can be maintained only by reducing costs, which entails reducing staff and cutting equipment.
        The Government do not accept that that creates a risk. However, when I take off in an airplane with my family, I want to hear reassurances about safety not from the Deputy Prime Minister, but from pilots, backed up by professional air traffic controllers. Those who are strongest in opposing the proposal are pilots, air traffic controllers and our own Transport Sub-Committee.
        It is not as though the Committee has not had a good go at this type of proposal. Year after year, we have had reports—they could not have been more categorical—

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        advising the current Government, and the previous one, that this proposal is the worst possible option. It is the worst because it privatises part of the regulation system. Air traffic controllers are a part of that system—keeping people apart and dealing with commercial competition between airlines—but we are selling them out.
        As has already been said today, no other country has privatised its air traffic services. The Government have seized on the comments of a visiting Dutch Minister, who said that his country may consider such a proposal and that it is an interesting option. Pardon me, but I do not think that that constitutes an international riot clamouring for privatisation.
        The Government have circulated detailed notes on discussions on safety that were held last week between unions and the Government. I am grateful for them, but I also note that they show that the unions refused to sign up to the proposal or to state that they were satisfied about safety. Today, they have reiterated in their briefings to us that they do not support the proposal, which they believe will increase risk to the travelling public.
        Let us be honest with people. How did the proposal arise? It was made because, in the previous general election campaign, the Tories found a black hole in our budgetary plans. The telephone call went out to each Front-Bench team to find a few hundred million, and the proposal was plucked out of the air. Let us not kid ourselves about it. The proposal is a political disaster and, potentially, a physical disaster.
        My constituents are the ones who are most at risk. They will never forgive a Government who put dogma before their safety. As has already been said, those who have attacked my constituents for their opposition to the proposal have attributed to them two motives, the first of which is industrial. However, the fact is that my air traffic controller constituents are passing up a £13 million handout because they want to keep the skies safe.
        Ideology is supposed to be the second motive for opposition to the proposal, but I say that ideology is forcing the proposal on us. There are now some Labour Members who think, "Public sector bad, private sector good." As a previous leader of our party said, when theory gets pickled into dogma, we wind up with a Labour Government privatising our air.
        Brian Cooper was one of the train drivers who died at Paddington. He was my constituent. Based on my memory, I will never support a further privatisation. I will vote for this group of amendments.
        Mr. Donald Gorrie: I should like to respond to the speech by my fellow countryman, the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith), but also to animadvert on the absence of some of my other countrymen. The Scottish National party made a big issue of the proposals in the Scottish Parliament, where it has no authority over them at all, but SNP Members have declined to appear in the Chamber to participate in today's debate. Some of them may come to vote, but I have seen none in the building.
        The three main arguments on the subject, to which I have listened with great interest, boil down to a safety issue, a political continuity issue and the fact that those who know about the subject say that they disagree with the proposals. National security is an additional issue.
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        Like the rest of us, the hon. Member for Strathkelvin and Bearsden can make up his own mind on safety. However, the argument that airplanes flying into Heathrow and Gatwick will be safer if air traffic services are under commercial pressure to make a profit is not an intellectual concept that I can sign up to.
        The political continuity argument is important, but the hon. Gentleman did not deal with it. Things change. It is legitimate for a party to change its position in the light of changing circumstances. Ministers' position would be legitimate if they could say, "We promised in the past that we would oppose privatisation or partial privatisation of air traffic control. However, things have changed in the following ways, and we have therefore changed our mind." That would be legitimate, but Ministers have not done it. They have merely adopted this new policy. I think that such ditching of promises contributes to the low turnouts at elections. There is a clear connection between the public being turned off—or scunnered, as we say in Scotland—by politicians who, collectively, do not stay firm on what we have said we would do.
        Mr. Robert Syms: Like Scottish student fees.
        Mr. Gorrie: We have delivered on Scottish student fees. I would be happy to argue with the hon. Gentleman about that at another time.
        With all due respect, neither the hon. Member for Strathkelvin and Bearsden nor I know all that much about radar and air traffic control. The people who do know about it are all against the Government on this. Surely it is compelling that those who work in the area and have no axe to grind in terms of profit are all on the same side. The House should support them, and not listen to Ministers who seem to be driven by some extraordinary remote control.
        Mr. Geraint Davies: I wish to make a short speech in favour of the Government's proposal. I declare a personal interest, in that, over the years, I have flown thousands of passengers on holiday—using NATS, of course—and I have a vested interest in keeping them alive.
        Any private operation has a concern for safety in terms of commercial viability and being sensitive to customers. There are a number of common objectives across the House, including the guarantee of heavy investment to secure the best air traffic management and safety system in the world. The system must become a benchmark for best practice. Beyond that, we want to extend our operations into European air space and to be a model for other air traffic control systems.
        We do not have a standstill situation. It is not good enough for people to say that we have the best system in the world, and that it will remain the best in the world. Britain is the biggest hub for international airlines in the world, and business is growing by 6 per cent. a year. To continue as we are is not a sustainable option. The reality is that the system is becoming more complex and more congested.
        Who has the resources in terms of skills and technology—as well as cash—to sort it out? What is the best incentive structure for efficiency and safety? Not every speaker has approached the issues in an upfront way.

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        Frankly, in certain airports, NATS needs to deliver safety systems that are not being delivered. In Edinburgh, we want a new NATS to bring in a requirement for night-time approach radar at affordable prices. That service should be deliverable to all significant airports as congestion grows.
        Those who think that NATS is great and that everything is all right should know that this is a moving picture, and we need a system that delivers increasing standards and provisions. Those who speak about increasing congestion at Heathrow and Gatwick are right, and that is the very reason why we need a mechanism for more investment and skills.
        Mr. Connarty: My ears pricked up when I heard my hon. Friend mention increased services in Edinburgh. Is there any suggestion or evidence that those could not be delivered by the trust model or by a wholly publicly owned company if it were allowed to get the money from the private sector?
        Mr. Davies: We need increasing standards and resources from the CAA. We need also to be confident that those complex services are delivered. I am trying to show that the model put forward by the Government satisfies all those criteria. It is not enough to say that we can fund safety, and we need to investigate the matter carefully. I recognise the sincerity and commitment of those who argue for fresh resourcing for the current system, and I respect their position. However, I ask everyone to listen to all sides of the debate.
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        There is some consensus in the industry—across the airlines, the pilots and the unions—in terms of a public-private partnership. One would not have thought that from listening to some of the speeches today. Some of the unions—including the pilots—are sympathetic towards public-private partnership. There is a debate about corporate governance, and there is consensus that extra cash should not necessarily be at the whim of individual Governments, who will have priorities such as the NHS.
        There is consensus on the need for certainty in investment flows. There is consensus on the opportunity for risk transfer into areas where risk can be managed more effectively, such as information technology systems. There is a view that there is something to be added from the private sector. The horizons for air traffic control should go beyond UK airspace, or any European airspace, and into other airspace. With the current dynamics of the industry, it is not enough simply to think about planes flying over Britain.
        I am not of the view that the private sector necessarily does project management better than the public sector. The Croydon tramlink—a public-private partnership—is four months late. However, the point is that the cost of the delay is with the private sector, not the public sector, and there is a lot of pressure to deliver. Nobody is saying that the private sector manages everything well, but there is an issue of risk transfer and of who does what best.
        People have focused on the tensions between safety and profit, and between operational standards and costs. Those are relevant, and it is not enough to dismiss them.
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        The Select Committee recommended that the CAA should be separate from NATS, and everyone agrees on that. That separation of regulation from operation has been introduced on the railways and is much to be welcomed. Ministers must underline the fact that the CAA's guidance and operation should be transparent so that people know what is happening and that safety is being enforced.
        We have debated whether the profit motive is in collision with the idea of investing in safety. If the new NATS has ambitions to take over European airspace and to sell itself as a model of best practice, surely it is in its commercial interest to invest in safety, as safety is its business.
        Mr. John Smith: Is there not a more fundamental point? The product of NATS is safety; the very service that NATS provides is safety. There is no safety dimension: NATS could not survive unless it delivered safety.
        Mr. Davies: My hon. Friend is right, and that is why there is an incentive to innovate in safety. NATS must sell safety and be the safest system in the world, with new technology to provide better safety and fewer congestion delays. That is its motivation.
        One of the amendments refers to a not-for-profit model, and the airlines are keen on that model. If they buy NATS—I am not averse to that—the airlines can make their money by investing in NATS and by reducing delays at airports by 10 per cent, after which they could make an enormous profit by selling tickets to people flying on their planes.
        The amount that the airlines would have to invest in the system is not all that great, and they have £24 billion worth of aircraft sitting on the tarmac in Britain. The idea that they would not invest in safety, in information technology and in efficiency does not stand up. Given the fact that they are vertically linked in the air business, it is not easy to put a limit on how much they would bid.
        We must also consider the management of technology. I have served on the Public Accounts Committee for the past three years, and week in, week out, we see examples of public sector management of very large IT infrastructure programmes going massively wrong. There are cultural issues and issues about whether we are paying civil servants enough to secure the skills to compete and negotiate on an equal level, but that is another debate. The private sector is in a position to manage the skills and the IT risks.
        There are complex issues of cash, IT, management and, ultimately, safety. My view is that the interests of securing our future as the international hub of air transport with the best record of safety and efficiency will be served by the model that the Government have proposed.
        Mr. Frank Field: On a point of order, Mr. Deputy Speaker. In your judgment, if we are to have three votes on this group, will we not need to conclude the debate by about 7 o'clock?
        Mr. Deputy Speaker: That is an observation that may be widely agreed with in the House. We shall observe what we shall observe in due course.
        Mrs. Fyfe: I congratulate my hon. Friend the Member for Ayr (Ms Osborne) on her campaign over the years to secure hundreds of jobs in her part of the world. If she has succeeded in that endeavour, that is no mean achievement.
        I wish that my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) was still in the Chamber. He accused those who disagree with him of being illogical. When I see him, I will have to ask him what adjective he would apply to someone who has considered an issue for considerably less time than those who work in the industry and provide the service, yet thinks that he knows better than they do what is good for the service.
        This is not a partnership, as others have said. It is a privatisation. The Government's holding can be reduced to 25 per cent. without the House being consulted again. Some day we will not even have that 25 per cent. The then Government will say, "What are you complaining about? You went three quarters of the way down this road." Joseph Chamberlain said 100 years ago that he did not want water to be held in the private sector because
        some things … are too important to leave to bodies whose first motive is profit and whose first fiduciary duty is to their shareholders.
        I would not disagree with him.
        I am not saying, "All private bad, all public good," but there is a difference, and one day it could be a crucial one. I sought some figures from the Library to compare the safety records of the public and private sectors. I was told that 85 per cent. of private sector employees were employed in establishments with occupational health measures, compared with 100 per cent. of public sector employees. The proportion of employees covered directly by such measures were 66 per cent. and 99 per cent. respectively. That is a useful measure of how the private sector can often be good on safety but can also fall down on it. The public sector is certainly under more pressure to deliver totally on safety.
        If the pilots are not convinced, I am not convinced. I do not believe that the two alternative proposals can be brushed off with a one-line statement that neither fits the needs of the service. I would hope to hear more from the Government.
        Before the 1997 general election, our party said:
        Our air is not for sale.
        I featured that in my election campaign, and I will not go back on my word to those who voted for me unless I see good reason for doing so—and I do not see sufficient reason here.
        Mr. Lembit Öpik: Does the hon. Lady agree that glider pilots, the British Gliding Association and the General Aviation Manufacturers and Traders Association are concerned that if the airways are sold off, they will be sold out, and probably pushed out of the sky?
        Mrs. Fyfe: The hon. Gentleman makes an important point.
        No other country in the world has privatised its air traffic control. Are other countries not faced with hard choices, too? We keep on hearing from the Government, when they want to do something that is unpopular and unwanted by their own supporters, that we are making a
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        hard choice. On some things, we should make a choice that people like, then fewer people might stay at home at elections.
        Why are the Government flying in the face of public unhappiness at this step? Why are we ignoring those who work at NATS and those who fly the planes? They have not merely gone through the motions of opposing the Bill: they have campaigned ceaselessly. They are serious about this. There was a time when a Labour Government would have listened more carefully to those who actually do the work.
        I have been reading the Government's briefings and I gather that a not-for-profit trust would be allowed to compete for the contract. If such a trust would be acceptable, why cannot the Government accept a new clause that allows us to go straight for that option and keep the private motive out?
        Mr. John Redwood: I support my hon. Friend the Member for North Essex (Mr. Jenkin), who has done a superb job in piloting the Opposition case, and I look forward to what he has to say later. I support new clause 26, to which he may speak if he catches your eye later, Mr. Deputy Speaker.
        In past debates on these matters, I have always declared the fact that my wife works for British Airways, but I can assure the House that she no longer does so. She has resigned from British Airways, so she is no longer privy to the ways of the board or beholden to the company.
        One of the big issues that has come out in this fascinating parliamentary debate is what the Government are trying to achieve. Is it a privatisation or is it not? As I urged several privatisations for love on previous Conservative Administrations, and for profit on Governments elsewhere in the world, when I was in business, perhaps my remarks may have some interest and merit.
        It is clear to me that privatisation occurs if control passes from the Government to a private sector interest. By that test, this is self-evidently a privatisation. The Government may try to dress it up in the new language of public-private partnership, but on this occasion that is either misleading or a load of ideological claptrap. This is a privatisation and it must be judged as such. We must apply the normal tests: whether it will be sold to the right people or group of interests; whether it will be sold at the right price; whether it will be run better than if it had remained in the public sector; and whether there might be a better way of serving the public interest and securing gain for the public purse.
        In all my experience of privatisations around the world, this is by far and away the worst model that I have ever seen. It manages to combine all the worst features of privatisation and avoid practically all the good ones. That is why my hon. Friend the Member for North Essex is right to say that the official Opposition cannot support this version of privatisation and was right, in his ever-helpful spirit, to suggest a better alternative.
        The models on offer from Opposition Members—the independent trust and the public corporation—which we have heard debated at some length, represent a much better interim position, at least, than the Government's version of privatisation. It would be far better to leave it alone or to keep it under the new control and ownership

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        that has been suggested by Labour Members until it could be privatised properly than to do what the Government propose.
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        The proposals are a kind of punk Thatcherism. The Government have a strange love-hate relationship with the Thatcherite message. As one who was proud to be involved during the 1980s and thought that a lot of good things happened then, I now recognise that it was a long time ago. The Government should recognise that the problems and solutions of this century are rather different. If they wish to be Thatcherite, however, they should try to understand the essence of the Thatcherite experience instead of producing a punk version that true Thatcherites cannot possibly support.
        A proper privatisation would surely seek to maximise wider share ownership, make sure that the British national interest was secure and protect the organisation from the possibility of being sold on the cheap to a single foreign interest. I have never come across a Government who wished to sell control for only 46 per cent. of the shares. One would at the very least expect them to sell 51 per cent. of the shares to the controlling interest.
        The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott): The Conservatives gave it away.
        Mr. Redwood: The Secretary of State dares to say that, but the Conservative Administration gave away shares to company employees, which was a good thing to do. They did not give them away to people from outside who had the money to buy. They were careful to protect important public interests from foreign acquisition by using golden shares that worked.
        I am concerned that the present Government are inventing a golden share that may well not work and may not protect the national interest. There is a strong possibility that the Government will end up selling 46 per cent. and a controlling interest for less than 46 per cent. of the true value. The numbers that they have trotted out so far and have got into a tangle over show that they envisage a sale at fire sale prices when there is absolutely no reason to sell an important national asset at a knock-down price.
        I do not wish to intrude on the debate about how Labour Members feel about supporting or not supporting the Government who stated clearly before the election that the air was not for sale. My right hon. and hon. Friends and I made no such statement, so we do not have that problem when deciding how to vote tonight. It is an important issue. I can speak from experience of supporting a Government who occasionally broke their word. I know how difficult it was and what an uncomfortable feeling it was. I always felt better when I stuck to what the Government had originally said and did not let down my voters by going along with the change of tack or script.
        I hope that the Government are aware that there is unity across the Floor of the House tonight on whether or not this botched and muddled privatisation should go ahead. The House should categorically say no; it is the wrong
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        privatisation at the wrong time. It is stripping a national asset on the cheap. It is punk Thatcherism of the worst and that is why there will be surprising unity in the Lobbies tonight on this issue.
        Jane Griffiths: It has been fascinating to listen to my constituency neighbour, the right hon. Member for Wokingham (Mr. Redwood), talking about punk Thatcherism, which may be an insult to punks and Thatcherites alike. Perhaps I am naive in these matters, but I cannot understand how an organisation that operates in the private sector, as NATS does, can be privatised and how we can describe the Government's proposals as privatisation. However, as the word has been bandied about, I shall let it go.
        In an intervention, my hon. Friend the Member for South Derbyshire (Mr. Todd) referred to the number of airports in the private sector that are not part of NATS and asked whether he should be concerned. Other hon. Members said that as only small numbers of air movements were not controlled by NATS, it did not really matter. However, if one air movement at any airport was not conducted safely or was not subject to proper controls and that aircraft fell out of the sky, we should all be concerned.
        Mrs. Dunwoody: As soon as any aircraft moves out of any airfield it is immediately taken over by an air traffic controller from the National Air Traffic Services who controls its flight wherever it goes.
        Jane Griffiths: I understand that and I thank my hon. Friend. However, my point relates to the numbers. I have figures for 1998, the most recent year for which there are complete statistics, which show that some 22 million passengers were carried for at least half of their journey outside the control of NATS. That is a lot of people by anyone's understanding. Almost half the air traffic movements in that year were, at least partially, not under the control of NATS. There are airports all over the country where NATS does not operate. They are in or near the constituencies of many hon. Members on both sides of the House. However, I have never heard of an hon. Member going to one of those airports and saying to the people there, "It is a pity, but you are not quite as good as the boys and girls at Heathrow and Gatwick. You are a bit second class and it is not good enough."
        Thinking about those matters leads me to seek reassurance from my right hon. Friend the Secretary of State. If all those people are working as air traffic controllers—and there may or may not be problems—will the new safety system that the Government propose for NATS affect the regulation of those operating outside NATS? Will it create more of a division? It does not seem to me that it will, but I should like some reassurance.
        We have heard some dud logic today. Is safety an issue? Of course it is because safety is the product of air traffic control. Air traffic control exists to make the skies safe, but one cannot be a little bit safe. Either something is safe or it is not. It is like saying that one cannot be a little bit pregnant. Safety, however, can never be totally guaranteed no matter what system we have. There were horrendous rail crashes under British Rail and subsequently after privatisation.
        Unsafe practice is bad practice, whether it happens in the private sector or the public sector. I am not ideological about it, and I do not believe that any right hon. or

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        hon. Member should be. We should all be concerned about moving into the 21st and 22nd centuries with good, safe, dynamic and vibrant air traffic control. So much in the Bill has not been discussed because we have been talking about air traffic control, which matters a lot. We should vote on the amendments as people's views are important, but it is a pity that the issue has overshadowed so many other good things that we are doing in transport. I shall not be supporting the amendments.
        Mr. Dalyell: In his serious and thoughtful speech, my hon. Friend the Member for Croydon, Central (Mr. Davies), who takes a different view, referred to some pilots sharing the general views of the Government. Like you, Mr. Deputy Speaker, I travel every week between London and Scotland and on 17 occasions now—as will be borne out by the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) and others—I have sent my executive card or my diamond card to the captain to ask whether he is prepared to have a word about air traffic control. On every occasion the captain has said yes, other than when he is engaged in training. I have asked the following question: "Do you, captain, back up the views of the British Air Line Pilots Association?" and on every occasion the answer has been emphatically, "Yes. We think that Chris Darke and his colleagues are right and we are very deeply concerned." Senior captains of British Airways have used the word "dangerous". It is not my word—it is theirs.
        Mr. Geraint Davies: May I make it clear that I said not that the british air line pilots association, Chris Darke and all pilots agreed with the Government's prescription, but that they agreed that a form of public-private partnership was the way forward? The debate is not about public-private partnership but the nature of corporate governance. The issue is whether the two converge. My hon. Friend will find that I am not disagreeing with what he says.
        Mr. Dalyell: I am grateful for that correction.
        Time presses, and I wish to ask my right hon. Friend the Secretary of State this question: why has he failed to persuade the pilots if his scheme is so watertight? They are serious people. Why is BALPA so opposed to it? We need an answer to that question.
        Let me share one other thought. What will people in this country think of the House if we are seen to impose on controllers and pilots, against their best judgment, a scheme that they do not want? Heaven help us if there is a crash, let alone a mid-air crash. What would people think of the House of Commons doing that?
        Mr. Pike: I am glad to have the opportunity of saying a few words in the debate. I speak as one who has not yet been convinced about which way to vote. We have not yet heard the Government's case. Although I have considerable sympathy with the new clauses, I have not been completely convinced that I should vote against the Government tonight. I have not yet voted against the Government, but they have still to convince me to go through the No Lobby.
        My hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) spoke earlier in the debate. The reports of the Transport Sub-Committee of the Select Committee on the Environment, Transport and Regional Affairs, of which my hon. Friend is the Chairman, have probably influenced my views on the issues more than the debate so far.
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        Obviously, safety must be paramount. I would not for a moment accuse my right hon. Friend the Secretary of State for the Environment, Transport and the Regions of not believing safety to be of the utmost importance. My hon. Friend the Member for Brighton, Kemptown (Dr. Turner) spoke about having a choice of planes. If airlines are not safe, there is something sadly wrong with a system that allows planes into the air. I do not particularly want to be on the ground, whether I have a choice or not, if the plane above me is about to crash. That worries me.
        On the forms of ownership, golden shares have become meaningless. Most of them were time-limited, and some have already lapsed, so that does not convince me. Share ownership for staff after privatisation has not been all that important. The worker-management buy-outs that took place in some sectors, which some of us strongly supported, ultimately sold out to Stagecoach, so that form of succession did not last very long.
        When we compare what is offered by the Bill and what is offered by new clauses 35 and 36, there does not seem to be much difference when it comes to the public sector borrowing requirement. I understand the Government's attitude, as it would ensure that the necessary investment can be made. However, it is time that the Government found a way of financing capital requirements for Government and public spending as opposed to revenue expenditure, without merging the two. It is nonsense that the Government should not be able to borrow on the normal market for long-term finance without such borrowing being included in the PSBR. It is nonsense to make a judgment in the year in which the expenditure is incurred.
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        The real difference is the cash that we will get for the shares—whether it will be 50 or 75 per cent. The Government do not need that money at this stage. The first tranche of money from the recent sale of the mobile phone network bands, which will be available over the next 20 years, is more than double what we will get for the sale of these shares. My right hon. Friend will argue that we need to spend money on hospitals and schools. However, I do not believe that the money from the sale of these shares is required.
        I remain unconvinced of the Government's case. I ask my right hon. Friend, even at this late stage, to think again about these provisions and say that he is prepared to consider them before the Bill is dealt with in the other place. We still have time to find a compromise. New clauses 35 and 36 propose what I believe to be solutions that the Government should not totally reject.
        Dr. Norman A. Godman: I promise that I will be brief—I simply wish to make a couple of points.
        I have signed the three new clauses. I hope that my right hon. Friend the Secretary of State for the Environment, Transport and the Regions will give sympathetic consideration to the case put so eloquently by my hon. Friend the Member for Ayr (Ms Osborne). As my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) rightly said, my hon. Friend the Member for Ayr has fought this campaign in a remarkably sustained and tireless way, quite unlike her predecessor, and she and her case deserve to be listened to.

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        In a debate such as this, which is largely, if not completely, confined to Labour contributions, I am reminded of the words of a retired deputy in Dail Eireann. He said that, as a Government Back Bencher, he always felt that, if he praised the Government, he would be accused of sycophancy by some, but if he had the temerity to criticise the Government, he would be accused of treachery by others.
        I hope that my right hon. and hon. Friends who have signed the new clauses will not accuse me of sycophancy when I say that my old friend the Deputy Prime Minister is utterly committed to the very highest safety standards. I first met him in the mid-1960s when he and I, along with my hon. Friend the Member for Hull, North (Mr. McNamara), fought campaigns to enhance the safety of merchant seamen and fishermen. So I have every confidence in my right hon. Friend—so does my family, which is made up of fishermen and their wives, daughters and sons—where maritime safety is concerned. For me—and, I am sure, for my family—that extends to his commitment to rail and air safety.
        I will now be accused by some of treachery for saying that I have some criticisms of the Bill. I genuinely believe that the trust option offered in this civil-minded debate is the best way forward for the Government. I asked my right hon. Friend a question at a meeting, and then disappeared before he had the opportunity to answer it. I offer my apologies to him publicly for that, but I had visitors from Australia to see to. The question was: why are we out of kilter with so many other states? Some of those states have right-wing Governments, but all of them seem to believe that such services should remain public.
        I have to be honest and point out that I am old, and thus old-fashioned enough to believe that some institutions, organisations, services and facilities should remain in the public domain. I believe that of the Prison Service and of NATS. I am happy to come out of the closet and say that, ideologically, it is better that some services and some resources are managed in the public interest by public servants—servants of the state. I shall not apologise for being old-fashioned in my views.
        Furthermore, I have long opposed private finance initiatives and public-private partnerships for the building of schools and hospitals—I am sorry that my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) is no longer in the Chamber. I have had to accept a PFI for the building of a service for geriatric patients in my constituency, but I have publicly voiced my opposition to private involvement in such an essential service.
        I hope that my friendship with my right hon. Friend the Deputy Prime Minister will not be diminished, but philosophically and ideologically, I think that the Government are wrong. I say that with great reluctance because I have great respect for, and trust in, my right hon. Friend. All my hon. Friends who have spoken in favour of the new clauses have emphasised safety; they are right to do so. I do not take issue with those who support the Government, but safety measures should remain in the public domain. I shall always believe that. That is why I shall support the new clauses, even though they will not be accepted by the Government.
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        However, I do ask the Government to take heed of the powerful case eloquently presented by my hon. Friend the Member for Ayr. They must concede that case. I hope that my right hon. Friend will reconsider that and other issues.
        As I am such an old-fashioned ideologue, perhaps it is just as well that I am not seeking reselection, but I hope that my right hon. Friend will listen to those who argue against him in this civil-minded debate.
        Mr. Alan Keen: As time is limited, I shall concentrate briefly on the crux of the issue. Since my election to this place in 1992, I have often been asked what it is like to be in Parliament. My standard answer is that it is better than going to work. I know that we work long hours in this place, but I worked in the private sector for the whole of my previous working life and it is pretty tough there—efficiency is achieved through drive and ruthlessness.
        My hon. Friend the Member for South Derbyshire (Mr. Todd) said that he wanted robust management—so do I. I want robust management in the design and installation of the IT systems and in their testing and re-testing. However, I want that robust management to end at the interface between managers who have to answer to shareholders and the people in front of screens who talk to pilots for hour after hour. I do not want robust management there. That is the crux of the debate.
        There are parallels with PFI in hospitals. I strongly support PFI in such cases—so no ideology is involved. However, as my hon. Friend the Member for Brighton, Kemptown (Dr. Turner) pointed out, we do not allow the people who build hospitals or those who have 25-year contracts to clean them to be involved on the clinical side—carrying out operations.
        My objection to the Government's proposals is based on that one issue. I repeat that I want to remove robust management—chasing profits and applying cost pressures—from that interface. I do not want such management to control the individuals who have the crucial job of talking to pilots.
        Some hon. Members have asked whether there is a difference between a small and a large airport in relation to safety. I have lived within five miles of Heathrow airport for 37 years. Those who do not live around the airport cannot fully understand the dangers. I lived close to the area of the Staines plane crash. Of course, that was nothing to do with air traffic control; it was a faulty plane. The trial taking place in Holland reminds us of the devastation that can happen on the ground—never mind a collision in the sky. My constituents suffer from aircraft noise day in and day out; a plane lands or takes off every 90 seconds. They deserve the best service that we can give them.
        For the third time, I repeat that we do not want robust management to affect those people who sit in front of the screens doing that vital job. If we want our Olympic athletes to break world records, we take every worry away from them so that they can focus on their running or whatever event they are competing in. The people in front of those screens as just as important—indeed, they are much more important than Olympic athletes. We should treat them in the same way. They should not be subject to the pressures of the private sector.
        Mr. Michael Connarty: I join my other colleagues in commending my hon. Friend the Member

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        for Ayr (Ms Osborne) on her speech on amendment No. 454. She has worked tirelessly to convince the Government that, whatever other structures are put in place, they must manage a two-centre strategy. Given that she is a Parliamentary Private Secretary—as I was for a year—I realise how difficult it must have been for her at times to convince the Government. Governments obviously assume that they have the votes of PPSs, who will be loyal. My hon. Friend has worked hard and I commend her on the amendment. It represents one last throw of an important dice—to include in the measure a commitment to the people of Prestwick and the workers there, so that they can be confident that, whatever the management system, there will be a second air traffic control centre.
        I seek one assurance from the Deputy Prime Minister. The amendment includes the words "was commissioned". How does my right hon. Friend interpret that? Does it mean that projects that are only at the planning stage? If the planning stage has already been initiated, will the project be encompassed under the provision? That is an important point, because Prestwick is at that stage—no bricks and mortar have been laid, so the project is at an early stage.
        I prefer new clause 37 because it would require a report to the House on the progress of those establishments before any commitment is given on transferring assets or shares—it would be the belt and braces for that operation. I should like either new clause 35 or new clause 36 to be passed because they offer a better structure than that proposed by the Government—whether the percentage share is 46:5:49 or 75:25.
        A couple of small matters keep coming up. It has been said that, because the rates for air traffic control are set by Europe, a publicly owned corporation could never finance its investment of £1.3 billion. In that case, why are no other EU air traffic services in the private sector? They, too, have to set their rates under European controls.
        The hon. Member for Croydon, Central (Mr. Davies) made an important point. If there were better IT efficiency in NATS, there would be a greater flow through airports; there would be fewer delays and income would increase. That would be true of the private sector—it would be a public or a private option.
        On management, the amendments on the trust model state clearly that all those involved in management would be from the private and the public sectors. The motivation would be the same for a trust or an IPOC as it would be for anyone else.
        Why is a public plc acceptable for the Post Office and not for NATS? As a member of the CWU—Communication Workers Union—parliamentary panel, I have to ask whether the measure is a Trojan horse. If air traffic control is privatised, will there be full privatisation of the Post Office? Will the Secretary of State explain the meaning of clause 49(4), if it does not mean that 75 per cent. will be owned by the private sector and 25 per cent by the public sector? Is that not privatisation?
        There is a difference between regulatory control and private profit. I recently picked up an example in the Financial Times which said that airlines in America have asked for a decrease of 10 per cent. in the amount of fresh air that circulates in cabins. They have done than to save millions of dollars in the cost of the fuel that is used to circulate the fresh air. If they are willing to make that cut, they will be willing to make others.
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        My final point is one that I have made time and again. I am against the proposal in principle. When we campaigned against water privatisation in Scotland, we were opposed not just to the method, but to the principle. I am against the proposal, and I believe that the Government will pay the consequences, because the people who voted us in are against both the principle of the privatisation and the method to be used.
        Mr. Bernard Jenkin: I am the 22nd Member to take part in the debate, which has been an exceptional parliamentary occasion of great credit to the House as a whole. We have had an extremely good debate.
        Part of the concern expressed by Labour Members reflects a point made by the hon. Member for Falkirk, East (Mr. Connarty) about whether the proposal is or is not a privatisation. Part of the concern has revolved around the issue of safety, but Conservative Members do not accept that there is any inherent conflict between safety and the right kind of privatisation. As has been pointed out, our airlines and airports are already in private hands and they are part of profitable enterprises, and civil aviation just happens to be the safest form of transport. A sensible privatisation scheme would present no safety threat at all.
        I wish to speak initially to our new clause 26, which sets out the policy on which the Conservative party stood at the previous general election. We have proposed a full flotation of NATS to create a great new British company with effective golden share arrangements that would protect the business from unwelcome foreign takeover and provide the widest possible share ownership among the British public.
        Labour's proposed public-private partnership, however, is something of a mess. The Secretary of State has many friends, but not, I fear, on this issue. Although we reject the notion that safety is incompatible with private ownership, we have several concerns about the proposed scheme and its circumstances.
        As my right hon. Friend the Member for Wokingham (Mr. Redwood) pointed out, this public-private partnership provides poor value for the taxpayer. National Air Traffic Services is probably worth between £1 billion and £1.5 billion and the PPP offers release of loans of about £300 million and net proceeds of £15 million from the sale of operational control of the business. A straight flotation would raise considerably more for the taxpayer, especially if sold in stages rather than in one go. Furthermore, sale proceeds are likely to be significantly enhanced after 2002 when the Swanwick centre becomes operational. Our amendment therefore also argues for delay.
        Labour's PPP will not extend share ownership. It is a complex part trade sale, forced on NATS to try to disguise the reality that it is just privatisation by another name. A straight flotation would create thousands of new shareholders.
        The strongest bidders appear to be foreign companies: Lockheed Martin, which is NATS's key supplier, is from the United States; Raytheon, which is working with the state-owned German air traffic control company, DFS, is also from the US; and Thompson CSF, with its avionics

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        subsidiary, Airsys, is a French virtually state-owned company. The only UK bidder appears to be the Airline Group, but there is no guarantee that its bid will be successful. The PPP will create not a new British company, but probably a foreign-owned subsidiary, and that does not appear to be in the national interest.
        Sale of control to a trade bidder carries extra risks. A straight flotation provides for continuation of the same business, but under the same management. A trade investor offers the downside risk of adverse interference in the management of the company and, in particular, in procurement issues. NATS could finish up tied to a less satisfactory supplier of equipment and there are also risks of transferring control to a state-owned entity in another country.
        Moreover, the shareholding structure of the PPP creates its own uncertainties about who will be in control of the business. The Government intend to hold more shares than the so-called strategic partner and the draft articles of association for the partnership company and the draft strategic partnership agreement are both complex documents. In this privatisation, confused responsibilities about who is responsible for safety could give rise to safety concerns. NATS's management are excellent and they have no need for outside expertise from a trade investor.
        Recent developments in European Community law mean that a sale at this time also presents a threat to national security on two fronts, and I totally reject the idea that this point is a red herring. First, after the PPP, the UK Government will not be able to determine who owns the controlling interest in NATS. The Bill provides for a golden share, but, in July 1999, the European Commission issued an opinion on golden shares in former state-owned companies as a preliminary to infraction proceedings against BAA's golden share. The Commission says that such shares are illegal under European Community law because they infringe provisions on the free movement of capital and the freedom of establishment.
        Secondly, it is likely that the provisions in the Bill, which provide for the intervention of the Secretary of State to protect national security, are also invalid under EC law. NATS deals with military flight plans and has knowledge of the whereabouts of military assets at times of international tension and during hostilities. Although that issue will be dealt with in a later debate, I point out that Royal Air Force chiefs of staff have expressed concern that sensitive intelligence information could be compromised.
        In short, Labour' s PPP is deeply flawed. Moreover, the assurances given by the Government are false. They continue to mention the strategic partner, but why does clause 53 refer to the possibility of flotation? In Committee, the Minister told us that recourse to immediate flotation can be made under the Bill in the event that a suitable strategic partner cannot be found.
        Why do the Government continue to talk about the retention of 49 per cent. when clause 49, now that it has been amended in Committee, specifically spells out that the Government's shareholding could be reduced to 25 per cent? What will happen if there is a rights issue then? What is clause 49 worth when it has a Henry VIII
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        provision stuck in it so, at a stroke of pen, the Government can, at a later date, tear up the golden share and the share restrictions provisions in the clause? It is incumbent on the Secretary of State to tell us exactly what the golden share is for, given that the European Commission has made it clear that it regards it to be illegal under European Community law.
        The Government's PPP is a bad privatisation that we cannot support. The Select Committee described it as
        the worst of all the possible options.
        The Conservative party invented privatisation, but we have never been the party of privatisation for its own sake. Privatisation should be a means of improving efficiency and effectiveness, but Labour's privatisation carries risks and disadvantages compared to our scheme.
        The Deputy Prime Minister has brought this so-called PPP to the House only because the Treasury is forcing him into the privatisation against his will. It is flawed by the Government's attempt to pretend that they are not privatising something when they are. Having promised before the election that
        our air is not for sale
        Labour is now promising a back-door privatisation. Our amendments sets out our policy for the privatisation of NATS—the solution that the aviation industry would truly prefer once national security issues have been resolved. We will vote to try to stop the Government from making a mess of one of this country's vital safety industries.
        Mr. Prescott: I think that everyone will agree that this has been a good debate. It has reflected Members' real concerns about change and about the possibility of a public-private partnership, as set out in the Bill, for air navigation services. I welcome all the contributions that have been made to the debate. I have disagreed with some comments and agreed with others; that is inevitable on these occasions. The Government have some differences both with the official Opposition and with the opposition on the Government Benches, but I shall choose to direct myself to the Bill.
        The hon. Member for North Essex (Mr. Jenkin), who spoke from the Opposition Front Bench, talked about a wonderful privatisation programme, of which, as he readily said, the proposal before us is not a part. The history of selling the public assets of the United Kingdom is not something to recommend when dealing with further privatisations. In whatever area, privatisation cost the country billions of pounds. The assets sold off were undervalued, as the Public Accounts Committee has made clear. I would not want to put forward any privatisation proposals of that sort.
        I am pleased, however, to support proposals that will allow the development of National Air Traffic Services and introduce measures to enhance air safety, at a time when the volume of air traffic is increasing extremely quickly. It has increased by about 20 per cent. in the past five years. This is clearly a growth industry in which safety is a major consideration, and I think that we all agree that there is a good safety record.
        I shall take up some of my hon. Friends' comments about the commitment and promise that "Our skies are not for sale". We did not state in the Labour party's manifesto that there was a commitment to do this or not to do it, but it was said at the general election that after

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        the decision to take on two years of the financial programme of the previous Administration, the question had to be asked, "What about the privatisation to which the previous Government were committed?"
        We took the view that we would not privatise NATS but would pursue a public-private partnership. That was at the heart of the election, and the point was made by my right hon. Friend the Chancellor of the Exchequer. This is not something that we have sneaked into the House. There was debate, which is a matter of record. It is possible to read exactly what was said at the time.
        The proposals that we are discussing are an important part of the Bill, which I am proud to endorse. The Bill will bring improvements to the railways, bus services, and local transport provision. Two key themes are improvements in public transport, which is once again a growth industry after decades of neglect, and an emphasis on the public and private sectors working together for the best overall solution.
        Much of the debate, quite properly, has been about safety. I have spent much of my 30 years in the House—I am grateful for the comments that have been made in that regard—dealing with safety issues in all industries. That is a matter of record. Some of my efforts have been successful; others have been less successful. However, it would be most unusual for me to make a proposal that threatened the safety of air navigation. If that is not enough to convince the House, I shall explain why the proposal will make air navigation far safer. Nothing is more important to the Government, or to me personally, than safety in transport.
        Everyone who has contributed to the debate, as well as the Select Committee on the Environment, Transport and Regional Affairs, has made it clear that the status quo is not acceptable—that is, that the roles of the operator, which is now responsible both for regulation and for operation, should be separated. The Select Committee said that the status of the CAA with NATS as a subsidiary was not acceptable.
        The Committee has been making that recommendation since the late 1980s. I agree with it, but I go further. The Government do not accept that the status quo is good enough for safety. There is a conflict of interest, and a change must be made, which is embodied in the Bill. We also consider that the status quo is not sufficient to meet the long-term investment needs of NATS, which will be the key to maintaining safety, better project management and the ability to grow.
        7.15 pm
        When we consider the safety record we see that there has been an increase in airprox near misses over the past 10 years. Near misses over those 10 years have increased by almost a third. That is alarming. However, there has been a tremendous growth in air traffic. A fair analysis of safety would mean setting the number of incidents against the growth of aeroplane passenger traffic.
        Against that background, it is essential that the new technology and the two-centre approach, which the previous Administration announced, is introduced if we are to improve safety. Swanwick has been delayed for five years, it is £400 million or £500 million over budget and it has still not been implemented. Perhaps someone should have been concerned to ensure that the project was
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        properly financed and properly implemented. It might have played a part in reducing the number of airprox incidents that we are now seeing. The amount of money that is invested in safety is just as important as skills and equipment.
        The issue is whether NATS can secure sufficient long-term investment and handle it efficiently. I have examined the record, and it is my judgment that it has not done so. We must change that. In that context, the status quo is not satisfactory.
        Dr. Jenny Tonge: The Deputy Prime Minister has mentioned three times already that there has been a huge growth in air transport in this country. Does he agree that if terminal 5 is allowed to go ahead, there will be a huge growth in movements in and out of Heathrow?
        Mr. Prescott: I have to deal with appeals on such planning issues, so I cannot make any comments now. The hon. Lady will have to wait until the report comes out.
        There has been considerable debate about traffic using privately run or publicly NATS-controlled airports. The argument has not greatly benefited the House, but at the same time it has been a good debate. NATS controls much more air traffic than anyone else, whether in terms of movements or of numbers of passengers, but the fact that it is larger does not necessarily mean that it is safer.
        Private sector companies, or non-NATS organisations, in Humberside, for example—the airport in my area—enable Concordes to land. Airbuses and jumbo jets land at Luton. Whether controllers are dealing with 10 or 400 people or with a jumbo or a small jet, I am sure that there is equal concern for safety. I think that that has emerged during the debate. The argument that private air traffic controllers are less safe than public controllers in NATS has been rejected.
        It has not emerged from the debate that NATS bids for private contracts. Presumably it does so with a profit motive. The assumption that profit undermines safety is not proven. Our experience in visiting airports is that it does not. All the discussion in the world, and all the cockpits that my hon. Friend the Member for Linlithgow (Mr. Dalyell) has visited, do not change that essential point. As for chats with pilots—I do not disagree with the idea that pilots are important people to take into account—I can recall pilots saying, "Don't privatise BAA; it will be less safe."
        Mr. Redwood: Will the Deputy Prime Minister give way?
        Mr. Prescott: Not now. I apologise. I am dealing with the real opposition.
        When I was talking to a pilot about these matters, he admitted that safety had improved since the privatisation of BAA. I do not want to advance the argument that private is good and public is bad, or vice versa. I want to come to a judgment on whether we are introducing measures to make the industry safer.
        The new clauses and amendments focus on whether a different company structure can achieve that objective. We have made it clear that we seek to introduce the public-private approach. New clauses 35 to 37 and new

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        clause 26 provide different options. Full privatisation is represented by new clause 26. My right hon. Friend the Member for Edinburgh, East and Musselburgh (Dr. Strang) seeks to retain a Companies Act company. The NAV Canada solution means that shares in the company cannot be sold, but there is a sale to a non-profit company. No shares are involved. So we are being offered a state corporation, a sort of trust corporation and the full privatisation that I have mentioned.
        I am confused when it comes to how Members will vote for all these propositions, unless it all amounts to a belt-and-braces job and, if they lose on the first one, they will move on to the next. I hope that they will not touch the third one.
        The Government believe in a public-private partnership. That is not a privatised approach but it is a different form of the public-private approach. It involves shares in the private sector, and is a different form of the public-private partnership from the one that I have developed for the London underground. There are horses for courses. It is a different partnership from the one I have developed for the channel tunnel rail link, which I had to rescue from the terrible mess created by the previous Administration. All those measures involved £20 billion.
        Those who said that the money would come from telecoms include, I think, my hon. Friend the Member for Burnley (Mr. Pike). However, that money has been spent at least five or six times already. Nobody needs to be convinced that Labour knows how to spend money; the difficulty is in pointing out where we raise the money that we spend. There is a history to that argument.
        The £20 billion has been raised from an industry that has an income flow, which means that there is less pressure on the public sector to raise revenue or capital for hospitals and schools. The £500 million that would be raised from the sale of NATS is equivalent to putting a pound on pensions. Judgments must be made about public expenditure priorities and the Government will take such considerations into account in their public expenditure programmes.
        Mr. Redwood: It is generous of the Deputy Prime Minister to let me intrude on private grief. He would agree that the Treasury would be over-generous if it offered £5 notes for £1—it might mean that there was an election coming up—but when the Government offer to pass on control of £1.5 billion of assets for £300 million, are they not offering £5 notes for £1? Those are the figures that the Government have supplied. Is not the sale of those assets, over the heads of British management and employees and probably to a foreign stakeholder or shareholder, a big slap in the face for those British managers and workers?
        Mr. Prescott: If the hon. Gentleman has read our response to the Select Committee report or our letters to the Committee, he will know that that is complete nonsense. The argument about those figures concerns a judgment about debt and equity, which we have dealt with before. I shall take no lectures from the hon. Gentleman, who was a member of the Government who, as the Public Accounts Committee has pointed out, undersold most of
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        our assets by billions of pounds. He now has the audacity to lecture us about selling off assets. Whatever the intention of the previous Administration, those sales were hardly good for the taxpayer.
        Mr. Jenkin: Will the right hon. Gentleman give way?
        Mr. Prescott: No, I must make progress.
        Mr. Jenkin rose—
        Mr. Prescott: Sit down.
        A public-private partnership, or any of the alternatives, must satisfy the Government's criteria. First, we want to separate NATS operation from CAA regulation—there seems to be agreement on that in the House—not only to maintain safety but to enhance it. I shall return to that point. We also want to maintain the national security objective, to secure the long-term investment that I have referred to, to introduce stability to the investment programme and to get better project management skills.
        I have heard the talk about Rover's management skills. Considering the problems that I inherited as Secretary of State, it is no wonder that in some of our public sector industries, projects are not completed on time and are over budget by billions of pounds. It was estimated that the two centres for NATS would cost about £600 million, but they will now cost us over £1 billion and the project is five years late. I could give several examples that demonstrate that although the public sector culture is plainly good for safety, the public sector is not too good at handling projects. The taxpayer has to make up any difference—to the tune of £1.5 billion in the case of the Jubilee line extension.
        A public-private partnership for London docklands light rail is on time, is as efficient as it is effective and imposes no extra cost on the taxpayer. We must take such examples into account when considering the quality of management. I have been a defender of the public sector all my life, but it costs a great deal more than the private sector, and we must ask why. Various explanations have been given, but I am faced with the practicalities.
        When considering a public-private partnership, we decided on a trade sale, to which the hon. Member for North Essex referred, to a strategic partner. The hon. Gentleman did not seem to think that that was a good idea. So why did the Conservative Government sell Rover to BMW for £1? When English, Welsh and Scottish railways came along, there were three companies to be sold. The American buyer said that it would only buy the lot. Not only did the Conservative Government give it the lot, but they gave it £250 million to take it away. [Interruption.]
        Mr. Deputy Speaker (Mr. Michael J. Martin): Order. There are many private conversations taking place in the Chamber. The right hon. Gentleman is addressing the House, so hon. Members should listen to what he has to say.
        Mr. Prescott: I certainly believe and intend to show that a public-private partnership with a strategic partner will provide a strong framework of public accountability.
        Mr. Jenkin: May I point out that if the right hon. Gentleman chose to pursue the NAV Canada proposal,

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        the Government would still receive a capital receipt for the sale of the business. NAV Canada raised a large sum in bonds to pay for the business, so the public sector still received a capital receipt.
        Mr. Prescott: I hear that defence, but my point was that although a strategic partner was involved, the business was sold to one operator. There are several examples of that, so I find it difficult to understand why the hon. Gentleman cannot accept the idea of a strategic partner. Indeed, his proposal would not allow for that: the hon. Gentleman wants to float shares in a full privatisation. That is a straightforward position, and it is argued that that is best for the taxpayer, but I am bound to say that the record of privatisations does not bear that out.
        New clause 35, which was moved by my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), makes it clear that we should take the option of state ownership. It would permit the separation of the provision of a service from its regulation, but would do little else. It would retain the service in the state sector and would therefore lead to problems in acquiring public investment. The service would have to apply for the Treasury for resources. There would also be all the difficulties of being unable to get a programme established for more than two or three years. The service would have to compete with others requiring public expenditure.
        Those problems have undermined the public sector in this country. Inadequate finance for the quality of service required is a reason why the quality of public services has got worse. We are desperately seeking to change that. The public sector suffers from stop-go investment, as I suggested, and that has dogged most of the transport industry for a long time.
        Swanwick is a classic example of a project that is over budget, over time and, frankly, will not even produce the facility that we want. Indeed, it is dogged by concerns of one form or another. My hon. Friend the Member for Ayr (Ms Osborne) told us about the two-centre operation, pointing out that a privatised service might not retain two centres.
        I listened carefully to what my hon. Friend had to say, and she made a powerful case tonight for what she has been advocating for a long time. There is no disagreement between us on the matter. In fact, the Prime Minister made it clear at the Dispatch Box that he accepted the spirit of her amendment and that her proposals would be written into the strategic agreement. The strategic partner would be required by the Government to build the second centre. The proposal would involve a golden share, directors and articles of association, as we pointed out to the Select Committee. I understand the fears expressed by my hon. Friend, and the concern about the matter in Scotland. On behalf of the Government, I accept her amendment.
        Ms Osborne: I just want to be absolutely sure about this. Is my right hon. Friend saying that he unequivocally accepts my amendment and that it will be added to the Bill?
        Mr. Prescott: Yes, my hon. Friend has re-emphasised my point. Her amendment will become a Government amendment, so I hope that that does not cause her embarrassment.
        My right hon. Friend the Member for Edinburgh, East and Musselburgh spoke to new clause 36. The new clause and the amendments associated with it seek to achieve a
        712
        different end from the Government's. They would involve the separation to which I referred, and would establish a strategic partner, but restrict it to being a not-for-profit company. That is a bit like Virgin saying that it would run the lottery on a not-for-profit basis—I shall leave aside the fact that my right hon. Friend would want a bit of profit for investment and equity.
        My right hon. Friend cited NAV Canada as a working example of that model. That suffers most of the drawbacks of a state-owned option. A letter sent to us makes it clear that the assets were sold by the state, and there is no accountability. Although the agreements and safety regulations do not say so, NAV Canada is privatised. All the assets that were owned by the state, and which in all other countries are still owned by the state, have been sold to a trust company. People have been appointed from the unions and other companies to sit on its board, but the trust company runs the service. There is no accountability to the Government, or Government ownership. Agreements have to be struck about defence—an issue that I should have thought would be of some concern to the House. Such an arrangement does not provide the proper degree of accountability; I believe that there must be accountability, which is why we are writing it into the process.
        7.30 pm
        Dr. Strang: At a meeting a week or so ago, we heard an address by the trade union director of NAV Canada, who explicitly stated that NAV Canada was answerable to the relevant Minister.
        Mr. Prescott: That Minister can issue directions along the lines of, "On safety, you must do this." However, NAV Canada does not raise money from the Government; it raises it from the private sector and is free to do so. In addition, it can do whatever it likes in respect of prices and profits—the Government have no control over those aspects. My point is that the arrangement brings all the problems that are associated with many trusts.
        I remember that when I first entered Parliament in the 1970s, there were problems with the Merseyside docks, then controlled by a trust. People got hold of it, forced down the prices and the brave Selsdon men would not allow it to be rescued. Eventually, they were forced to mount a rescue. That trust arrangement had failed to provide adequate investment or proper accountability to Government. That would not be a satisfactory way to deal with air traffic control, with all its defence implications and investment requirements; nor would such an arrangement allow the business to invest abroad.
        I always take the cost-plus approach to public investment. An arrangement such as the one proposed could not be controlled; it could set its own prices and exploit its monopoly position—unaccountable to anyone, it would simply pass on all the costs. That is not the sort of culture that will produce the efficiency and investment that the modern aviation industry needs.
        Dr. Lynne Jones: Do my right hon. Friend's comments about the lack of accountability of trust bodies apply to registered social landlords, to whom the Government propose to transfer council housing?
        Mr. Prescott: There are all sorts of trusts, including hospital trusts. There are always problems to be

        713
        addressed. My point is that, while a trust body could raise the capital to make the necessary investment, it could not provide the sort of flexibility, management and efficiency that we want. Furthermore, I believe that the Government should have some control and that the industry should be accountable. We can argue about percentages—49 per cent., or whatever it might be—
        Mr. Deputy Speaker: Order. It is a small matter in the circumstances, but would the right hon. Gentleman please face the Chair?
        Mr. Prescott: I apologise, Mr. Deputy Speaker.
        We do not accept that a public-private partnership would jeopardise safety. The airline operators told the Select Committee that the Government's proposals would enhance aviation safety and they stated why that was. People say that the airline operators would say that, but I cannot accept that the 13 major UK airline operators are indifferent to whether or not an aeroplane crashes, or to their safety record. To say that they are is silly and dangerous and undermines the very concept of safety.
        Safety regulation will remain firmly in the public sector in a reformed Civil Aviation Authority. We shall ensure that we remain the safest providers of air traffic control services in the world. There was some doubt about whether such an approach would be effective, but the CAA is a public body and I thought that everyone accepted that safety should rest with a public body, not with the body that is responsible for operations. Therefore, the CAA has to do the job.
        Safety is of paramount importance, which is why we have made it clear that the CAA is to set minimum standards. As my hon. Friend the Member for Reading, West (Mr. Salter) said, there are higher standards than those enforced by the CAA. However, we have made it clear that all the standards that currently apply will continue to do so. Furthermore, we have transferred safety from the operating body to the public body—the Select Committee asked for that major change and we have made it. We have done more, by making it absolutely clear to the companies involved they cannot provide air traffic control services unless the CAA safety regulation group is satisfied that they can do so safely.
        The CAA will continue to conduct regular inspections and audits. The competence and medical fitness of all operators will be tested annually. Procedures and equipment used by controllers must be approved by the CAA, and it will control maximum working hours. A company will not be able to make controllers work longer, because their hours will continue to be controlled by regulation—nothing will change. Given the growth in the industry, it is likely that more air traffic controllers will be required in future. The point is that controllers cannot be made to work more hours. The type of equipment used will be set down in the licence and controlled by the CAA. Therefore, nothing changes in respect of controllers and their equipment.
        We met trade union representatives and discussed all those matters. Let me make it clear: the unions did not endorse our proposal and I did not ask them to. However, we have adopted important safety measures, continued existing measures and then gone further, in response to
        714
        union concerns. Safety will be mentioned in the strategic partnership agreement; a NATS board director appointed by the Government will have specific responsibility for safety; and a safety monitoring committee will be established, chaired by a Government-appointed director. The safety management system that includes elements that exceed statutory minimum requirements will remain in place. The CAA's audit arrangements will be extended to ensure that there is an annual audit of safety management. Finally, training and development standards will be improved. Those are the safety concerns of people in the industry and we have met those concerns. I have not asked the unions to endorse the Government's proposal for a public-private partnership. However, the unions have endorsed those safety improvements.
        We have a gold-plated arrangement. First, we have separated the public safety regulator from the service operator, as everyone wants us to do. Secondly, we have strengthened the strategic partnership agreement and the articles of association. Thirdly, the Government will appoint to the board directors who have specific responsibility for safety. By any stretch of the imagination, those measures represent an improvement on current safety standards. I do not accept that safety will be weakened, even though we can argue about how far we should go to improve it. The Bill will ensure far better safety standards than I inherited and than were prevalent when I started with the public-private partnership.
        Mr. Dalyell: Given my right hon. Friend's comments of the past five minutes, how come he has failed to persuade IPMS and BALPA?
        Mr. Prescott: They were the ones that argued that BAA should not be privatised, saying that it would be less safe, but they changed their minds. I had to argue the Government's case for this PPP, but I listened carefully to workers and operators in the industry.
        My hon. Friend the Member for Greenock and Inverclyde (Dr. Godman) mentioned the fishing industry. When we tried to improve safety in that industry, those who opposed our measures most fiercely were the fishermen. They gave us all sorts of reasons why they did not believe in it—for example, that it would cost a lot more. However, on safety we have to do what is right. That is the obligation that I have accepted and I can live with its being unpopular, just as I can live with leaving a safer system than I inherited.
        I have heard a lot of tosh about the public and private sectors. Do hon. Members feel less safe when they get on board a private-sector aeroplane than they did when British Airways was a public company? When that airline was publicly owned, did they choose it because they believed it was safe? Perhaps they are the sort of people who felt better on reading the old local authority notices that said, "This is a nuclear-free area." It is a load of nonsense—[HON. MEMBERS: "Come over here."] The Conservatives invite me to cross the Floor, but I am just trying to make a point within the context of the amendments.
        We have been told to remember Paddington, but I remember King's Cross and Clapham—public sector disasters. Safety was not better under the public sector in that industry. [HON. MEMBERS: "Come on over."] I shall present the arguments and state our priorities as I think

        715
        best. I have heard a lot about safety, but no one has said anything about the safety improvements. A lot of tosh has been said about the public and private sectors; my response is to cite the example of the railways. I have never accepted "public good, private bad," or "private good, public bad." I believe that a balance has to be struck so that we can get the best from both, and a public-private partnership is designed to do exactly that. That is what the Bill will achieve.
        The Tories' alternative is privatisation—they have made that absolutely clear. They do not want there to be any control or accountability; they simply want to sell the operation for the best possible price. They are indifferent to the safety, efficiency or effectiveness of the industry. We utterly reject such an approach. We shall retain shares through the public-private partnership because we believe that that will provide one form of accountability. That accountability is also expressed in the articles of association, the strategic partnership agreement, a strict operating licence, the continuing Government and employee shareholding, and the appointment of Government directors with a veto in respect of key issues such as safety, major investment and national security.
        As I have heard a bit about national security, I might add that the annual report of the Joint Air Navigation Services Council—the body that brings together the CAA, NATS and the Ministry of Defence—which has just come out, says of the Government's proposals:
        the Council believes they will preserve the successful civil/military relationship that currently exists between NATS and the MOD and ensure that air traffic services are sustained on a joint and integrated basis …
        I refer to my right hon. Friend the Member for Edinburgh, East and Musselburgh that report of the bodies that have responsibility for defence and national security, which is the subject of the next debate.
        We have put into the Bill many checks and controls. I have made my points about safety. I believe that it is absolutely clear that we can enhance the safety of the system. I have made it clear that I accept amendment No. 454 tabled by my hon. Friend the Member for Ayr. That is right; we shall be writing the proposal into the Bill.
        We said from the beginning that we would listen to what was said on the changes. Governments cannot be arrogant and ignore matters; they have to make their case in the House. We have made it clear from the beginning that the changes constitute a public-private partnership, and that the two-centre model may be written into the Bill—we have listened on that and accepted it. We have increased and enhanced safety, as requested by the trade unions, after months of negotiation.
        All that makes for a good Bill. All that, in my mind, produces a public-private partnership that will meet the needs of the country and the investment requirements of civil aviation, which will be safer, more accountable and over which the Government will have considerable influence and control. Above all, that will provide safe and sustained investment. I commend the Bill to the House.
        Mrs. Dunwoody: NATS has no comparison in the private sector. Air traffic controllers do not compete against one another for the control of aircraft—they co-operate. The men and women working in the sector are absolutely certain that the Government's proposal is
        716
        not the way forward. We believe, as the Transport Sub-Committee pointed out, that there are various ways in which that paying service, which has always been able to return money to the public sector, could operate safely and effectively either as a public corporation or as a trust.
        I hope that every Member will decide that they must live with their consciences on the quality of the votes that they cast tonight, and I hope that they will bear that in mind.
        Question put, That the clause be read a Second time:—
        The House divided: Ayes 99, Noes 307.

        Division No. 184]

        [7.42 pm

        AYES

        Allan, Richard

        Hughes, Simon (Southwark N)

        Ashdown, Rt Hon Paddy

        Jones, Dr Lynne (Selly Oak)

        Baker, Norman

        Jones, Nigel (Cheltenham)

        Ballard, Jackie

        Keen, Alan (Feltham & Heston)

        Barnes, Harry

        Kennedy, Rt Hon Charles (Ross Skye & Inverness W)

        Beggs, Roy

        Bell, Martin (Tatton)

        Kirkwood, Archy

        Benn, Rt Hon Tony (Chesterfield)

        Lepper, David

        Bennett, Andrew F

        Lewis, Terry (Worsley)

        Brake, Tom

        Livingstone, Ken

        Brand, Dr Peter

        Livsey, Richard

        Breed, Colin

        Llwyd, Elfyn

        Bruce, Malcolm (Gordon)

        McDonnell, John

        Burnett, John

        Maclennan, Rt Hon Robert

        Burstow, Paul

        Mahon, Mrs Alice

        Campbell, Rt Hon Menzies (NE Fife)

        Marek, Dr John

        Michie, Mrs Ray (Argyll & Bute)

        Canavan, Dennis

        Moore, Michael

        Chaytor, David

        Oaten, Mark

        Chidgey, David

        Öpik, Lembit

        Clapham, Michael

        Prentice, Gordon (Pendle)

        Clwyd, Ann

        Prosser, Gwyn

        Connarty, Michael

        Rendel, David

        Corbyn, Jeremy

        Ross, William (E Lond'y)

        Cotter, Brian

        Russell, Bob (Colchester)

        Cryer, Mrs Ann (Keighley)

        Salter, Martin

        Cryer, John (Hornchurch)

        Sanders, Adrian

        Dalyell, Tam

        Shepherd, Richard

        Davey, Edward (Kingston)

        Simpson, Alan (Nottingham S)

        Davidson, Ian

        Skinner, Dennis

        Davis, Rt Hon David (Haltemprice)

        Smith, Llew (Blaenau Gwent)

        Dean, Mrs Janet

        Smith, Sir Robert (W Ab'd'ns)

        Dismore, Andrew

        Smyth, Rev Martin (Belfast S)

        Dobbin, Jim

        Strang, Rt Hon Dr Gavin

        Donohoe, Brian H

        Stunell, Andrew

        Dunwoody, Mrs Gwyneth

        Swinney, John

        Ewing, Mrs Margaret

        Taylor, David (NW Leics)

        Fearn, Ronnie

        Taylor, Matthew (Truro)

        Field, Rt Hon Frank

        Tonge, Dr Jenny

        Flynn, Paul

        Turner, Dr Desmond (Kemptown)

        Foster, Don (Bath)

        Tyler, Paul

        Fyfe, Maria

        Wareing, Robert N

        George, Andrew (St Ives)

        Webb, Steve

        Gidley, Ms Sandra

        Welsh, Andrew

        Godman, Dr Norman A

        Wigley, Rt Hon Dafydd

        Golding, Mrs Llin

        Williams, Mrs Betty (Conwy)

        Gordon, Mrs Eileen

        Willis, Phil

        Gorrie, Donald

        Winnick, David

        Harris, Dr Evan

        Harvey, Nick

        Tellers for the Ayes:

        Heath, David (Somerton & Frome)

        Mr. Bill Michie and

        Hopkins, Kelvin

        Mr. Mike Wood.

        NOES

        Adams, Mrs Irene (Paisley N)

        Allen, Graham

        Ainger, Nick

        Anderson, Donald (Swansea E)

        Ainsworth, Robert (Cov'try NE)

        Anderson, Janet (Rossendale)

        Alexander, Douglas

        Armstrong, Rt Hon Ms Hilary

        717

        Ashton, Joe

        Eagle, Angela (Wallasey)

        Atherton, Ms Candy

        Eagle, Maria (L 'pool Garston)

        Atkins, Charlotte

        Edwards, Huw

        Banks, Tony

        Ellman, Mrs Louise

        Battle, John

        Ennis, Jeff

        Bayley, Hugh

        Fisher, Mark

        Beard, Nigel

        Fitzpatrick, Jim

        Beckett, Rt Hon Mrs Margaret

        Fitzsimons, Mrs Lorna

        Bell, Stuart (Middlesbrough)

        Flint, Caroline

        Benn, Hilary (Leeds C)

        Follett, Barbara

        Bermingham, Gerald

        Foster, Rt Hon Derek

        Berry, Roger

        Foster, Michael Jabez (Hastings)

        Best, Harold

        Foster, Michael J (Worcester)

        Betts, Clive

        Foulkes, George

        Blackman, Liz

        Galbraith, Sam

        Blair, Rt Hon Tony

        Gapes, Mike

        Blears, Ms Hazel

        Gardiner, Barry

        Blizzard, Bob

        George, Bruce (Walsall S)

        Blunkett, Rt Hon David

        Gibson, Dr Ian

        Boateng, Rt Hon Paul

        Gilroy, Mrs Linda

        Borrow, David

        Goggins, Paul

        Bradley, Keith (Withington)

        Griffiths, Jane (Reading E)

        Bradley, Peter (The Wrekin)

        Griffiths, Nigel (Edinburgh S)

        Bradshaw, Ben

        Griffiths, Win (Bridgend)

        Brown, Rt Hon Gordon (Dunfermline E)

        Grocott, Bruce

        Gunnell, John

        Brown, Rt Hon Nick (Newcastle E)

        Hall, Mike (Weaver Vale)

        Brown, Russell (Dumfries)

        Hall, Patrick (Bedford)

        Browne, Desmond

        Hamilton, Fabian (Leeds NE)

        Burden, Richard

        Hanson, David

        Burgon, Colin

        Harman, Rt Hon Ms Harriet

        Butler, Mrs Christine

        Heal, Mrs Sylvia

        Byers, Rt Hon Stephen

        Healey, John

        Caborn, Rt Hon Richard

        Henderson, Doug (Newcastle N)

        Campbell, Mrs Anne (C'bridge)

        Henderson, Ivan (Harwich)

        Campbell, Ronnie (Blyth V)

        Hepburn, Stephen

        Cann, Jamie

        Heppell, John

        Caplin, Ivor

        Hesford, Stephen

        Casale, Roger

        Hewitt, Ms Patricia

        Cawsey, Ian

        Hill, Keith

        Chapman, Ben (Wirral S)

        Hodge, Ms Margaret

        Church, Ms Judith

        Hoey, Kate

        Clark, Rt Hon Dr David (S Shields)

        Home Robertson, John

        Clark, Dr Lynda (Edinburgh Pentlands)

        Hood, Jimmy

        Hoon, Rt Hon Geoffrey

        Clark, Paul (Gillingham)

        Hope, Phil

        Clarke, Charles (Norwich S)

        Howarth, Alan (Newport E)

        Clarke, Eric (Midlothian)

        Howarth, George (Knowsley N)

        Clarke, Rt Hon Tom (Coatbridge)

        Howells, Dr Kim

        Coaker, Vernon

        Hoyle, Lindsay

        Coffey, Ms Ann

        Hughes, Ms Beverley (Stretford)

        Coleman, Iain

        Hughes, Kevin (Doncaster N)

        Colman, Tony

        Humble, Mrs Joan

        Cook, Rt Hon Robin (Livingston)

        Hurst, Alan

        Cooper, Yvette

        Hutton, John

        Corbett, Robin

        Iddon, Dr Brian

        Corston, Jean

        Illsley, Eric

        Cousins, Jim

        Ingram, Rt Hon Adam

        Cox, Tom

        Jackson, Ms Glenda (Hampstead)

        Cranston, Ross

        Jackson, Helen (Hillsborough)

        Crausby, David

        Jenkins, Brian

        Cummings, John

        Johnson, Alan (Hull W & Hessle)

        Cunningham, Rt Hon Dr Jack (Copeland)

        Johnson, Miss Melanie (Welwyn Hatfield)

        Cunningham, Jim (Cov'try S)

        Jones, Mrs Fiona (Newark)

        Curtis-Thomas, Mrs Claire

        Jones, Helen (Warrington N)

        Darling, Rt Hon Alistair

        Jones, Martyn (Clwyd S)

        Darvill, Keith

        Jowell, Rt Hon Ms Tessa

        Davey, Valerie (Bristol W)

        Kaufman, Rt Hon Gerald

        Davies, Rt Hon Denzil (Llanelli)

        Keeble, Ms Sally

        Davies, Geraint (Croydon C)

        Keen, Ann (Brentford & Isleworth)

        Dawson, Hilton

        Kelly, Ms Ruth

        Denham, John

        Kemp, Fraser

        Dobson, Rt Hon Frank

        Kennedy, Jane (Wavertree)

        Doran, Frank

        Khabra, Piara S

        Dowd, Jim

        Kidney, David

        718

        King, Andy (Rugby & Kenilworth)

        Primarolo, Dawn

        King, Ms Oona (Bethnal Green)

        Purchase, Ken

        Kumar, Dr Ashok

        Quin, Rt Hon Ms Joyce

        Ladyman, Dr Stephen

        Quinn, Lawrie

        Lawrence, Mrs Jackie

        Radice, Rt Hon Giles

        Leslie, Christopher

        Rammell, Bill

        Levitt, Tom

        Raynsford, Nick

        Lewis, Ivan (Bury S)

        Reed, Andrew (Loughborough)

        Liddell, Rt Hon Mrs Helen

        Reid, Rt Hon Dr John (Hamilton N)

        Linton, Martin

        Robinson, Geoffrey (Cov'try NW)

        Lloyd, Tony (Manchester C)

        Roche, Mrs Barbara

        Lock, David

        Rooker, Rt Hon Jeff

        Love, Andrew

        Rooney, Terry

        McAvoy, Thomas

        Ross, Ernie (Dundee W)

        McCafferty, Ms Chris

        Rowlands, Ted

        McDonagh, Siobhain

        Roy, Frank

        Macdonald, Calum

        Ruane, Chris

        McFall, John

        Ruddock, Joan

        McGuire, Mrs Anne

        Ryan, Ms Joan

        McIsaac, Shona

        Sarwar, Mohammad

        McKenna, Mrs Rosemary

        Sawford, Phil

        Mackinlay, Andrew

        Sedgemore, Brian

        McLeish, Henry

        Sheerman, Barry

        McNulty, Tony

        Sheldon, Rt Hon Robert

        MacShane, Denis

        Shipley, Ms Debra

        Mactaggart, Fiona

        Singh, Marsha

        McWalter, Tony

        Smith, Rt Hon Andrew (Oxford E)

        McWilliam, John

        Smith, Angela (Basildon)

        Mallaber, Judy

        Smith, Rt Hon Chris (Islington S)

        Mandelson, Rt Hon Peter

        Smith, Jacqui (Redditch)

        Marsden, Gordon (Blackpool S)

        Smith, John (Glamorgan)

        Marsden, Paul (Shrewsbury)

        Snape, Peter

        Marshall, David (Shettleston)

        Soley, Clive

        Martlew, Eric

        Southworth, Ms Helen

        Maxton, John

        Spellar, John

        Meacher, Rt Hon Michael

        Squire, Ms Rachel

        Merron, Gillian

        Michael, Rt Hon Alun

        Starkey, Dr Phyllis

        Milburn, Rt Hon Alan

        Steinberg, Gerry

        Miller, Andrew

        Stewart, David (Inverness E)

        Moffatt, Laura

        Stewart, Ian (Eccles)

        Moonie, Dr Lewis

        Stinchcombe, Paul

        Moran, Ms Margaret

        Stoate, Dr Howard

        Morgan, Ms Julie (Cardiff N)

        Straw, Rt Hon Jack

        Morley, Elliot

        Stringer, Graham

        Morris, Rt Hon Ms Estelle (B'ham Yardley)

        Stuart, Ms Gisela

        Sutcliffe, Gerry

        Morris, Rt Hon Sir John (Aberavon)

        Taylor, Rt Hon Mrs Ann (Dewsbury)

        Mountford, Kali

        Taylor, Ms Dari (Stockton S)

        Mowlam, Rt Hon Marjorie

        Temple-Morris, Peter

        Mudie, George

        Thomas, Gareth (Clwyd W)

        Mullin, Chris

        Thomas, Gareth R (Harrow W)

        Murphy, Denis (Wansbeck)

        Timms, Stephen

        Murphy, Jim (Eastwood)

        Tipping, Paddy

        Murphy, Rt Hon Paul (Torfaen)

        Todd, Mark

        Naysmith, Dr Doug

        Touhig, Don

        Norris, Dan

        Trickett, Jon

        O'Brien, Bill (Normanton)

        Truswell, Paul

        O'Brien, Mike (N Warks)

        Turner, Dr George (NW Norfolk)

        O'Hara, Eddie

        Turner, Neil (Wigan)

        Olner, Bill

        Twigg, Derek (Halton)

        O'Neill, Martin

        Twigg, Stephen (Enfield)

        Organ, Mrs Diana

        Tynan, Bill

        Osborne, Ms Sandra

        Vaz, Keith

        Palmer, Dr Nick

        Ward, Ms Claire

        Pearson, Ian

        Watts, David

        Pendry, Tom

        Whitehead, Dr Alan

        Perham, Ms Linda

        Wicks, Malcolm

        Pickthall, Colin

        Williams, Rt Hon Alan (Swansea W)

        Plaskitt, James

        Pollard, Kerry

        Williams, Alan W (E Carmarthen)

        Pond, Chris

        Wills, Michael

        Pope, Greg

        Wilson, Brian

        Prentice, Ms Bridget (Lewisham E)

        Woolas, Phil

        Prescott, Rt Hon John

        Worthington, Tony

        719

        Wright, Anthony D (Gt Yarmouth)

        Tellers for the Noes:

        Wright, Dr Tony (Cannock)

        Mr. David Jamieson and

        Wyatt, Derek

        Mr. David Clelland.

        Question accordingly negatived.

      New Clause 36

        TRANSFER TO BE TO NOT FOR PROFIT COMPANY
        '.—(1) Any property, rights or liabilities shall only be transferred under a transfer scheme to a not for profit company.
        (2) The transfer of property, rights or liabilities under a transfer scheme may be by such means, including sale or lease, and on such terms as the Secretary of State, with the approval of the Treasury, may determine.
        (3) A transfer scheme shall not come into force unless a draft of the scheme has been laid before and approved by resolution of each House of Parliament.
        (4) A not for profit company to which any property, rights or liabilities have been transferred under a transfer scheme shall not—

        (a) issue any shares or share rights; or

        (b) pay any dividend or profits to its members.

        (5) For purposes of this Part, "not for profit company" means a company—

        (a) which has been formed and registered as a company limited by guarantee under the Companies Act 1985 or the Companies (Northern Ireland) Order 1986; and

        (b) the membership of which, in the opinion of the Secretary of State includes those who are representative of providers, employees and users of aviation, air travel, air navigation and related services.'.—[Dr. Strang.]

        Brought up, and read the First time.
        Motion made, and Question put, That the clause be read a Second time:—
        The House divided: Ayes 248, Noes 308.

        Division No. 185]

        [7.55 pm

        AYES

        Ainsworth, Peter (E Surrey)

        Bruce, Malcolm (Gordon)

        Allan, Richard

        Burnett, John

        Amess, David

        Burns, Simon

        Ancram, Rt Hon Michael

        Burstow, Paul

        Arbuthnot, Rt Hon James

        Butterfill, John

        Ashdown, Rt Hon Paddy

        Cable, Dr Vincent

        Atkinson, David (Bour'mth E)

        Campbell, Rt Hon Menzies (NE Fife)

        Atkinson, Peter (Hexham)

        Baker, Norman

        Cash, William

        Baldry, Tony

        Chapman, Sir Sydney (Chipping Barnet)

        Ballard, Jackie

        Barnes, Harry

        Chaytor, David

        Beggs, Roy

        Chidgey, David

        Bell, Martin (Tatton)

        Chope, Christopher

        Benn, Rt Hon Tony (Chesterfield)

        Clapham, Michael

        Bennett, Andrew F

        Clappison, James

        Bercow, John

        Clark, Dr Michael (Rayleigh)

        Beresford, Sir Paul

        Clarke, Rt Hon Kenneth (Rushcliffe)

        Blunt, Crispin

        Body, Sir Richard

        Clifton-Brown, Geoffrey

        Boswell, Tim

        Clwyd, Ann

        Bottomley, Peter (Worthing W)

        Collins, Tim

        Bottomley, Rt Hon Mrs Virginia

        Connarty, Michael

        Brady, Graham

        Corbyn, Jeremy

        Brake, Tom

        Cormack, Sir Patrick

        Brand, Dr Peter

        Cotter, Brian

        Brazier, Julian

        Cran, James

        Breed, Colin

        Cryer, Mrs Ann (Keighley)

        Brooke, Rt Hon Peter

        Cryer, John (Hornchurch)

        Browning, Mrs Angela

        Curry, Rt Hon David

        Bruce, Ian (S Dorset)

        Dalyell, Tam

        Question accordingly negatived.

      New Clause 37

        PARLIAMENTARY APPROVAL OF TRANSFER SCHEME
        '.—(1) A transfer scheme made by the CAA or the Secretary of State shall not come into force unless it has been approved by a resolution of each House of Parliament passed on a motion moved by or on behalf of the Secretary of State.
        (2) No such motion shall be moved by or on behalf of the Secretary of State unless at least seven days before the date on which the motion is to be debated by either House of Parliament he has caused a report to be laid before both Houses which—

        (a) sets out the progress which has been made in respect of any project for the development of facilities connected with national air traffic services which was commissioned by the transferor before the date on which this Act received Royal Assent; and

        (b) confirms that the Treasury have given their consent to the proposed transfer.'.—[Mr. Dalyell]

        Brought up, and read the First time.
        Motion made, and Question put, That the clause be read a Second time:—
        The House proceeded to a Division.
        Mr. Phil Hope: On a point of order, Mr. Deputy Speaker. There appears to be a delay in the Lobbies; could the reason for it be investigated?
        Mr. Deputy Speaker: The hon. Gentleman should leave me to worry about such matters.
        The House having divided: Ayes 244, Noes 310.

        Division No. 185]

        [7.55 pm

        AYES

        Ainsworth, Peter (E Surrey)

        Bruce, Malcolm (Gordon)

        Allan, Richard

        Burnett, John

        Amess, David

        Burns, Simon

        Ancram, Rt Hon Michael

        Burstow, Paul

        Arbuthnot, Rt Hon James

        Butterfill, John

        Ashdown, Rt Hon Paddy

        Cable, Dr Vincent

        Atkinson, David (Bour'mth E)

        Campbell, Rt Hon Menzies (NE Fife)

        Atkinson, Peter (Hexham)

        Baker, Norman

        Cash, William

        Baldry, Tony

        Chapman, Sir Sydney (Chipping Barnet)

        Ballard, Jackie

        Barnes, Harry

        Chaytor, David

        Beggs, Roy

        Chidgey, David

        Bell, Martin (Tatton)

        Chope, Christopher

        Benn, Rt Hon Tony (Chesterfield)

        Clapham, Michael

        Bennett, Andrew F

        Clappison, James

        Bercow, John

        Clark, Dr Michael (Rayleigh)

        Beresford, Sir Paul

        Clarke, Rt Hon Kenneth (Rushcliffe)

        Blunt, Crispin

        Body, Sir Richard

        Clifton-Brown, Geoffrey

        Boswell, Tim

        Clwyd, Ann

        Bottomley, Peter (Worthing W)

        Collins, Tim

        Bottomley, Rt Hon Mrs Virginia

        Connarty, Michael

        Brady, Graham

        Corbyn, Jeremy

        Brake, Tom

        Cormack, Sir Patrick

        Brand, Dr Peter

        Cotter, Brian

        Brazier, Julian

        Cran, James

        Breed, Colin

        Cryer, Mrs Ann (Keighley)

        Brooke, Rt Hon Peter

        Cryer, John (Hornchurch)

        Browning, Mrs Angela

        Curry, Rt Hon David

        Bruce, Ian (S Dorset)

        Dalyell, Tam

        Davey, Edward (Kingston)

        Leigh, Edward

        Davidson, Ian

        Lepper, David

        Davies, Quentin (Grantham)

        Letwin, Oliver

        Davis, Rt Hon David (Haltemprice)

        Lewis, Dr Julian (New Forest E)

        Day, Stephen

        Lewis, Terry (Worsley)

        Dean, Mrs Janet

        Lidington, David

        Dismore, Andrew

        Lilley, Rt Hon Peter

        Dobbin, Jim

        Livingstone, Ken

        Donohoe, Brian H

        Livsey, Richard

        Dorrell, Rt Hon Stephen

        Lloyd, Rt Hon Sir Peter (Fareham)

        Duncan, Alan

        Llwyd, Elfyn

        Duncan Smith, Iain

        Luff, Peter

        Dunwoody, Mrs Gwyneth

        Lyell, Rt Hon Sir Nicholas

        Emery, Rt Hon Sir Peter

        McDonnell, John

        Evans, Nigel

        MacGregor, Rt Hon John

        Ewing, Mrs Margaret

        McIntosh, Miss Anne

        Faber, David

        MacKay, Rt Hon Andrew

        Fabricant, Michael

        Maclean, Rt Hon David

        Fallon, Michael

        Maclennan, Rt Hon Robert

        Fearn, Ronnie

        McLoughlin, Patrick

        Field, Rt Hon Frank

        Madel, Sir David

        Flight, Howard

        Mahon, Mrs Alice

        Flynn, Paul

        Major, Rt Hon John

        Forth, Rt Hon Eric

        Malins, Humfrey

        Foster, Don (Bath)

        Maples, John

        Fowler, Rt Hon Sir Norman

        Marek, Dr John

        Fox, Dr Liam

        Marshall-Andrews, Robert

        Fraser, Christopher

        Maude, Rt Hon Francis

        Fyfe, Maria

        Mawhinney, Rt Hon Sir Brian

        Garnier, Edward

        May, Mrs Theresa

        George, Andrew (St Ives)

        Michie, Mrs Ray (Argyll & Bute)

        Gibb, Nick

        Moore, Michael

        Gidley, Ms Sandra

        Moss, Malcolm

        Gill, Christopher

        Nicholls, Patrick

        Gillan, Mrs Cheryl

        Norman, Archie

        Godman, Dr Norman A

        Oaten, Mark

        Golding, Mrs Llin

        O'Brien, Stephen (Eddisbury)

        Gordon, Mrs Eileen

        Öpik, Lembit

        Gorman, Mrs Teresa

        Ottaway, Richard

        Gorrie, Donald

        Page, Richard

        Gray, James

        Paice, James

        Green, Damian

        Paterson, Owen

        Greenway, John

        Pickles, Eric

        Gummer, Rt Hon John

        Portillo, Rt Hon Michael

        Hague, Rt Hon William

        Prentice, Gordon (Pendle)

        Hamilton, Rt Hon Sir Archie

        Prior, David

        Hammond, Philip

        Prosser, Gwyn

        Harris, Dr Evan

        Randall, John

        Harvey, Nick

        Redwood, Rt Hon John

        Hawkins, Nick

        Rendel, David

        Hayes, John

        Robathan, Andrew

        Heald, Oliver

        Robertson, Laurence

        Heath, David (Somerton & Frome)

        Roe, Mrs Marion (Broxbourne)

        Heath, Rt Hon Sir Edward

        Ruffley, David

        Heathcoat-Amory, Rt Hon David

        Russell, Bob (Colchester)

        Heseltine, Rt Hon Michael

        St Aubyn, Nick

        Hogg, Rt Hon Douglas

        Salter, Martin

        Hopkins, Kelvin

        Sanders, Adrian

        Howard, Rt Hon Michael

        Sayeed, Jonathan

        Howarth, Gerald (Aldershot)

        Shephard, Rt Hon Mrs Gillian

        Hughes, Simon (Southwark N)

        Shepherd, Richard

        Hunter, Andrew

        Simpson, Alan (Nottingham S)

        Jack, Rt Hon Michael

        Simpson, Keith (Mid-Norfolk)

        Jackson, Robert (Wantage)

        Skinner, Dennis

        Jenkin, Bernard

        Smith, Llew (Blaenau Gwent)

        Jones, Dr Lynne (Selly Oak)

        Smith, Sir Robert (W Ab'd'ns)

        Jones, Nigel (Cheltenham)

        Smyth, Rev Martin (Belfast S)

        Keen, Alan (Feltham & Heston)

        Soames, Nicholas

        Kennedy, Rt Hon Charles (Ross Skye & Inverness W)

        Spelman, Mrs Caroline

        Spicer, Sir Michael

        Key, Robert

        Spring, Richard

        Kirkbride, Miss Julie

        Stanley, Rt Hon Sir John

        Kirkwood, Archy

        Steen, Anthony

        Laing, Mrs Eleanor

        Stevenson, George

        Lait, Mrs Jacqui

        Strang, Rt Hon Dr Gavin

        Lansley, Andrew

        Streeter, Gary

        721

        Stunell, Andrew

        Webb, Steve

        Swayne, Desmond

        Wells, Bowen

        Swinney, John

        Welsh, Andrew

        Syms, Robert

        Whitney, Sir Raymond

        Tapsell, Sir Peter

        Whittingdale, John

        Taylor, Ian (Esher & Walton)

        Widdecombe, Rt Hon Miss Ann

        Taylor, John M (Solihull)

        Wigley, Rt Hon Dafydd

        Taylor, Matthew (Truro)

        Wilkinson, John

        Taylor, Sir Teddy

        Willetts, David

        Tonge, Dr Jenny

        Williams, Mrs Betty (Conwy)

        Townend, John

        Willis, Phil

        Tredinnick, David

        Wilshire, David

        Trend, Michael

        Winnick, David

        Turner, Dr Desmond (Kemptown)

        Winterton, Mrs Ann (Congleton)

        Tyler, Paul

        Winterton, Nicholas (Macclesfield)

        Tyrie, Andrew

        Yeo, Tim

        Viggers, Peter

        Young, Rt Hon Sir George

        Walter, Robert

        Wardle, Charles

        Tellers for the Ayes:

        Wareing, Robert N

        Mr. Bill Michie and

        Waterson, Nigel

        Mr. Mike Wood.

        NOES

        Adams, Mrs Irene (Paisley N)

        Clark, Paul (Gillingham)

        Ainger, Nick

        Clarke, Charles (Norwich S)

        Ainsworth, Robert (Cov'try NE)

        Clarke, Eric (Midlothian)

        Alexander, Douglas

        Clarke, Rt Hon Tom (Coatbridge)

        Allen, Graham

        Clarke, Tony (Northampton S)

        Anderson, Donald (Swansea E)

        Coaker, Vernon

        Anderson, Janet (Rossendale)

        Coffey, Ms Ann

        Armstrong, Rt Hon Ms Hilary

        Coleman, Iain

        Ashton, Joe

        Colman, Tony

        Atherton, Ms Candy

        Cook, Rt Hon Robin (Livingston)

        Atkins, Charlotte

        Cooper, Yvette

        Banks, Tony

        Corbett, Robin

        Battle, John

        Corston, Jean

        Bayley, Hugh

        Cousins, Jim

        Beard, Nigel

        Cox, Tom

        Beckett, Rt Hon Mrs Margaret

        Cranston, Ross

        Bell, Stuart (Middlesbrough)

        Crausby, David

        Benn, Hilary (Leeds C)

        Cummings, John

        Bermingham, Gerald

        Cunningham, Rt Hon Dr Jack (Copeland)

        Berry, Roger

        Best, Harold

        Cunningham, Jim (Cov'try S)

        Betts, Clive

        Curtis-Thomas, Mrs Claire

        Blackman, Liz

        Darling, Rt Hon Alistair

        Blair, Rt Hon Tony

        Darvill, Keith

        Blears, Ms Hazel

        Davey, Valerie (Bristol W)

        Blizzard, Bob

        Davies, Rt Hon Denzil (Llanelli)

        Blunkett, Rt Hon David

        Davies, Geraint (Croydon C)

        Boateng, Rt Hon Paul

        Dawson, Hilton

        Borrow, David

        Denham, John

        Bradley, Keith (Withington)

        Dobson, Rt Hon Frank

        Bradley, Peter (The Wrekin)

        Doran, Frank

        Bradshaw, Ben

        Dowd, Jim

        Brown, Rt Hon Gordon (Dunfermline E)

        Eagle, Angela (Wallasey)

        Eagle, Maria (L'pool Garston)

        Brown, Rt Hon Nick (Newcastle E)

        Edwards, Huw

        Brown, Russell (Dumfries)

        Ellman, Mrs Louise

        Browne, Desmond

        Ennis, Jeff

        Burden, Richard

        Fisher, Mark

        Burgon, Colin

        Fitzpatrick, Jim

        Butler, Mrs Christine

        Fitzsimons, Mrs Lorna

        Byers, Rt Hon Stephen

        Flint, Caroline

        Caborn, Rt Hon Richard

        Follett, Barbara

        Campbell, Mrs Anne (C'bridge)

        Foster, Rt Hon Derek

        Campbell, Ronnie (Blyth V)

        Foster, Michael Jabez (Hastings)

        Cann, Jamie

        Foster, Michael J (Worcester)

        Caplin, Ivor

        Foulkes, George

        Casale, Roger

        Galbraith, Sam

        Cawsey, Ian

        Gapes, Mike

        Chapman, Ben (Wirral S)

        Gardiner, Barry

        Church, Ms Judith

        George, Bruce (Walsall S)

        Clark, Rt Hon Dr David (S Shields)

        Gibson, Dr Ian

        Clark, Dr Lynda (Edinburgh Pentlands)

        Gilroy, Mrs Linda

        Goggins, Paul

        722

        Griffiths, Jane (Reading E)

        McKenna, Mrs Rosemary

        Griffiths, Nigel (Edinburgh S)

        Mackinlay, Andrew

        Griffiths, Win (Bridgend)

        McLeish, Henry

        Grocott, Bruce

        McNulty, Tony

        Gunnell, John

        MacShane, Denis

        Hall, Mike (Weaver Vale)

        Mactaggart, Fiona

        Hall, Patrick (Bedford)

        McWalter, Tony

        Hamilton, Fabian (Leeds NE)

        McWilliam, John

        Hanson, David

        Mallaber, Judy

        Harman, Rt Hon Ms Harriet

        Mandelson, Rt Hon Peter

        Heal, Mrs Sylvia

        Marsden, Gordon (Blackpool S)

        Healey, John

        Marsden, Paul (Shrewsbury)

        Henderson, Doug (Newcastle N)

        Marshall, David (Shettleston)

        Henderson, Ivan (Harwich)

        Martlew, Eric

        Hepburn, Stephen

        Maxton, John

        Heppell, John

        Meacher, Rt Hon Michael

        Hesford, Stephen

        Merron, Gillian

        Hewitt, Ms Patricia

        Michael, Rt Hon Alun

        Hill, Keith

        Milburn, Rt Hon Alan

        Hodge, Ms Margaret

        Miller, Andrew

        Hoey, Kate

        Moffatt, Laura

        Home Robertson, John

        Moonie, Dr Lewis

        Hood, Jimmy

        Moran, Ms Margaret

        Hoon, Rt Hon Geoffrey

        Morgan, Ms Julie (Cardiff N)

        Hope, Phil

        Morley, Elliot

        Howarth, Alan (Newport E)

        Morris, Rt Hon Ms Estelle (B'ham Yardley)

        Howarth, George (Knowsley N)

        Howells, Dr Kim

        Morris, Rt Hon Sir John (Aberavon)

        Hoyle, Lindsay

        Hughes, Ms Beverley (Stretford)

        Mountford, Kali

        Hughes, Kevin (Doncaster N)

        Mowlam, Rt Hon Marjorie

        Humble, Mrs Joan

        Mudie, George

        Hurst, Alan

        Mullin, Chris

        Hutton, John

        Murphy, Denis (Wansbeck)

        Iddon, Dr Brian

        Murphy, Jim (Eastwood)

        Illsley, Eric

        Murphy, Rt Hon Paul (Torfaen)

        Ingram, Rt Hon Adam

        Naysmith, Dr Doug

        Jackson, Ms Glenda (Hampstead)

        Norris, Dan

        Jackson, Helen (Hillsborough)

        O'Brien, Bill (Normanton)

        Jenkins, Brian

        O'Brien, Mike (N Warks)

        Johnson, Alan (Hull W & Hessle)

        O'Hara, Eddie

        Johnson, Miss Melanie (Welwyn Hatfield)

        Olner, Bill

        O'Neill, Martin

        Jones, Mrs Fiona (Newark)

        Osborne, Ms Sandra

        Jones, Helen (Warrington N)

        Palmer, Dr Nick

        Jones, Martyn (Clwyd S)

        Pearson, Ian

        Jowell, Rt Hon Ms Tessa

        Pendry, Tom

        Kaufman, Rt Hon Gerald

        Perham, Ms Linda

        Keeble, Ms Sally

        Pickthall, Colin

        Keen, Ann (Brentford & Isleworth)

        Plaskitt, James

        Kelly, Ms Ruth

        Pollard, Kerry

        Kemp, Fraser

        Pond, Chris

        Kennedy, Jane (Wavertree)

        Pope, Greg

        Khabra, Piara S

        Pound, Stephen

        Kidney, David

        Prentice, Ms Bridget (Lewisham E)

        King, Andy (Rugby & Kenilworth)

        Prescott, Rt Hon John

        King, Ms Oona (Bethnal Green)

        Primarolo, Dawn

        Kumar, Dr Ashok

        Purchase, Ken

        Ladyman, Dr Stephen

        Quin, Rt Hon Ms Joyce

        Lawrence, Mrs Jackie

        Quinn, Lawrie

        Leslie, Christopher

        Radice, Rt Hon Giles

        Levitt, Tom

        Rammell, Bill

        Lewis, Ivan (Bury S)

        Raynsford, Nick

        Liddell, Rt Hon Mrs Helen

        Reed, Andrew (Loughborough)

        Linton, Martin

        Reid, Rt Hon Dr John (Hamilton N)

        Lloyd, Tony (Manchester C)

        Robinson, Geoffrey (Cov'try NW)

        Lock, David

        Roche, Mrs Barbara

        Love, Andrew

        Rooker, Rt Hon Jeff

        McAvoy, Thomas

        Rooney, Terry

        McCabe, Steve

        Ross, Ernie (Dundee W)

        McCafferty, Ms Chris

        Rowlands, Ted

        McDonagh, Siobhain

        Roy, Frank

        Macdonald, Calum

        Ruane, Chris

        McFall, John

        Ruddock, Joan

        McGuire, Mrs Anne

        Ryan, Ms Joan

        McIsaac, Shona

        Sarwar, Mohammad

        723

        Sawford, Phil

        Timms, Stephen

        Sedgemore, Brian

        Tipping, Paddy

        Sheerman, Barry

        Todd, Mark

        Shipley, Ms Debra

        Touhig, Don

        Singh, Marsha

        Trickett, Jon

        Smith, Rt Hon Andrew (Oxford E)

        Truswell, Paul

        Smith, Angela (Basildon)

        Turner, Dennis (Wolverth'ton SE)

        Smith, Rt Hon Chris (Islington S)

        Turner, Dr George (NW Norfolk)

        Smith, Jacqui (Redditch)

        Turner, Neil (Wigan)

        Smith, John (Glamorgan)

        Twigg, Derek (Halton)

        Snape, Peter

        Twigg, Stephen (Enfield)

        Soley, Clive

        Tynan, Bill

        Southworth, Ms Helen

        Vaz, Keith

        Spellar, John

        Ward, Ms Claire

        Squire, Ms Rachel

        Watts, David

        Starkey, Dr Phyllis

        Whitehead, Dr Alan

        Steinberg, Gerry

        Wicks, Malcolm

        Stewart, David (Inverness E)

        Williams, Rt Hon Alan (Swansea W)

        Stewart, Ian (Eccles)

        Stinchcombe, Paul

        Williams, Alan W (E Carmarthen)

        Stoate, Dr Howard

        Wills, Michael

        Straw, Rt Hon Jack

        Wilson, Brian

        Stringer, Graham

        Woolas, Phil

        Stuart, Ms Gisela

        Worthington, Tony

        Sutcliffe, Gerry

        Wright, Anthony D (Gt Yarmouth)

        Taylor, Rt Hon Mrs Ann (Dewsbury)

        Wright, Dr Tony (Cannock)

        Wyatt, Derek

        Taylor, Ms Dan (Stockton S)

        Temple-Morris, Peter

        Tellers for the Noes:

        Thomas, Gareth (Clwyd W)

        Mr. David Jamieson and

        Thomas, Gareth R (Harrow W)

        Mr. David Clelland.

        Division No. 186]

        [8.13 pm

        AYES

        Ainsworth, Peter (E Surrey)

        Dunwoody, Mrs Gwyneth

        Allan, Richard

        Emery, Rt Hon Sir Peter

        Amess, David

        Evans, Nigel

        Ancram, Rt Hon Michael

        Ewing, Mrs Margaret

        Arbuthnot, Rt Hon James

        Faber, David

        Ashdown, Rt Hon Paddy

        Fabricant, Michael

        Atkinson, David (Bour'mth E)

        Fallon, Michael

        Atkinson, Peter (Hexham)

        Fearn, Ronnie

        Baker, Norman

        Field, Rt Hon Frank

        Baldry, Tony

        Flight, Howard

        Ballard, Jackie

        Flynn, Paul

        Barnes, Harry

        Forth, Rt Hon Eric

        Beggs, Roy

        Foster, Don (Bath)

        Benn, Rt Hon Tony (Chesterfield)

        Fowler, Rt Hon Sir Norman

        Bennett, Andrew F

        Fox, Dr Liam

        Bercow, John

        Fraser, Christopher

        Beresford, Sir Paul

        Fyfe, Maria

        Blunt, Crispin

        Garnier, Edward

        Body, Sir Richard

        George, Andrew (St Ives)

        Boswell, Tim

        Gibb, Nick

        Bottomley, Peter (Worthing W)

        Gidley, Ms Sandra

        Bottomley, Rt Hon Mrs Virginia

        Gill, Christopher

        Brady, Graham

        Gillan, Mrs Cheryl

        Brake, Tom

        Godman, Dr Norman A

        Brand, Dr Peter

        Golding, Mrs Llin

        Brazier, Julian

        Gordon, Mrs Eileen

        Breed, Colin

        Gorman, Mrs Teresa

        Brooke, Rt Hon Peter

        Gorrie, Donald

        Bruce, Ian (S Dorset)

        Gray, James

        Bruce, Malcolm (Gordon)

        Green, Damian

        Burnett, John

        Greenway, John

        Burns, Simon

        Gummer, Rt Hon John

        Burstow, Paul

        Hague, Rt Hon William

        Butterfill, John

        Hamilton, Rt Hon Sir Archie

        Cable, Dr Vincent

        Hammond, Philip

        Campbell, Rt Hon Menzies (NE Fife)

        Harris, Dr Evan

        Harvey, Nick

        Cash, William

        Hawkins, Nick

        Chapman, Sir Sydney (Chipping Barnet)

        Hayes, John

        Heald, Oliver

        Chaytor, David

        Heath, David (Somerton & Frome)

        Chidgey, David

        Heath, Rt Hon Sir Edward

        Chope, Christopher

        Heathcoat-Amory, Rt Hon David

        Clapham, Michael

        Heseltine, Rt Hon Michael

        Clappison, James

        Hogg, Rt Hon Douglas

        Clark, Dr Michael (Rayleigh)

        Hopkins, Kelvin

        Clarke, Rt Hon Kenneth (Rushcliffe)

        Howard, Rt Hon Michael

        Howarth, Gerald (Aldershot)

        Clifton-Brown, Geoffrey

        Hughes, Simon (Southwark N)

        Clwyd, Ann

        Hunter, Andrew

        Collins, Tim

        Jack, Rt Hon Michael

        Connarty, Michael

        Jackson, Robert (Wantage)

        Corbyn, Jeremy

        Jenkin, Bernard

        Cormack, Sir Patrick

        Jones, Dr Lynne (Selly Oak)

        Cotter, Brian

        Jones, Nigel (Cheltenham)

        Cran, James

        Keen, Alan (Feltham & Heston)

        Cryer, Mrs Ann (Keighley)

        Kennedy, Rt Hon Charles (Ross Skye & Inverness W)

        Cryer, John (Hornchurch)

        Curry, Rt Hon David

        Key, Robert

        Dalyell, Tam

        Kirkbride, Miss Julie

        Davey, Edward (Kingston)

        Kirkwood, Archy

        Davidson, Ian

        Laing, Mrs Eleanor

        Davies, Quentin (Grantham)

        Lait, Mrs Jacqui

        Davis, Rt Hon David (Haltemprice)

        Lansley, Andrew

        Day, Stephen

        Leigh, Edward

        Dean, Mrs Janet

        Lepper, David

        Dobbin, Jim

        Letwin, Oliver

        Donohoe, Brian H

        Lewis, Dr Julian (New Forest E)

        Dorrell, Rt Hon Stephen

        Lewis, Terry (Worsley)

        Duncan, Alan

        Lidington, David

        Duncan Smith, Iain

        Lilley, Rt Hon Peter

        725

        Livingstone, Ken

        Simpson, Keith (Mid-Norfolk)

        Livsey, Richard

        Skinner, Dennis

        Lloyd, Rt Hon Sir Peter (Fareham)

        Smith, Llew (Blaenau Gwent)

        Llwyd, Elfyn

        Smith, Sir Robert (W Ab'd'ns)

        Luff, Peter

        Smyth, Rev Martin (Belfast S)

        Lyell, Rt Hon Sir Nicholas

        Soames, Nicholas

        McDonnell, John

        Spelman, Mrs Caroline

        MacGregor, Rt Hon John

        Spicer, Sir Michael

        McIntosh, Miss Anne

        Spring, Richard

        MacKay, Rt Hon Andrew

        Stanley, Rt Hon Sir John

        Maclean, Rt Hon David

        Steen, Anthony

        Maclennan, Rt Hon Robert

        Stevenson, George

        McLoughlin, Patrick

        Strang, Rt Hon Dr Gavin

        Madel, Sir David

        Streeter, Gary

        Mahon, Mrs Alice

        Stunell, Andrew

        Major, Rt Hon John

        Swayne, Desmond

        Malins, Humfrey

        Swinney, John

        Maples, John

        Syms, Robert

        Marek, Dr John

        Tapsell, Sir Peter

        Maude, Rt Hon Francis

        Taylor, Ian (Esher & Walton)

        Mawhinney, Rt Hon Sir Brian

        Taylor, John M (Solihull)

        May, Mrs Theresa

        Taylor, Matthew (Truro)

        Michie, Mrs Ray (Argyll & Bute)

        Taylor, Sir Teddy

        Moore, Michael

        Tonge, Dr Jenny

        Morgan, Alasdair (Galloway)

        Townend, John

        Moss, Malcolm

        Tredinnick, David

        Nicholls, Patrick

        Trend, Michael

        Norman, Archie

        Turner, Dr Desmond (Kemptown)

        Oaten, Mark

        Tyler, Paul

        O'Brien, Stephen (Eddisbury)

        Tyrie, Andrew

        Öpik, Lembit

        Viggers, Peter

        Ottaway, Richard

        Walter, Robert

        Page, Richard

        Wareing, Robert N

        Paice, James

        Waterson, Nigel

        Paterson, Owen

        Webb, Steve

        Pickles, Eric

        Wells, Bowen

        Portillo, Rt Hon Michael

        Welsh, Andrew

        Prentice, Gordon (Pendle)

        Whitney, Sir Raymond

        Prior, David

        Whittingdale, John

        Prosser, Gwyn

        Widdecombe, Rt Hon Miss Ann

        Randall, John

        Wigley, Rt Hon Dafydd

        Redwood, Rt Hon John

        Wilkinson, John

        Rendel, David

        Willetts, David

        Robathan, Andrew

        Williams, Mrs Betty (Conwy)

        Robertson, Laurence

        Willis, Phil

        Roe, Mrs Marion (Broxbourne)

        Wilshire, David

        Ruffley, David

        Winnick, David

        Russell, Bob (Colchester)

        Winterton, Mrs Ann (Congleton)

        St Aubyn, Nick

        Winterton, Nicholas (Macclesfield)

        Salter, Martin

        Yeo, Tim

        Sanders, Adrian

        Young, Rt Hon Sir George

        Sayeed, Jonathan

        Shephard, Rt Hon Mrs Gillian

        Tellers for the Ayes:

        Shepherd, Richard

        Mr. Bill Michie and

        Simpson, Alan (Nottingham S)

        Mr. Mike Wood.

        NOES

        Adams, Mrs Irene (Paisley N)

        Berry, Roger

        Ainger, Nick

        Best, Harold

        Ainsworth, Robert (Cov'try NE)

        Betts, Clive

        Alexander, Douglas

        Blackman, Liz

        Allen, Graham

        Blair, Rt Hon Tony

        Anderson, Donald (Swansea E)

        Blears, Ms Hazel

        Anderson, Janet (Rossendale)

        Blizzard, Bob

        Armstrong, Rt Hon Ms Hilary

        Blunkett, Rt Hon David

        Ashton, Joe

        Boateng, Rt Hon Paul

        Atherton, Ms Candy

        Borrow, David

        Atkins, Charlotte

        Bradley, Keith (Withington)

        Banks, Tony

        Bradley, Peter (The Wrekin)

        Battle, John

        Bradshaw, Ben

        Bayley, Hugh

        Brown, Rt Hon Gordon (Dunfermline E)

        Beard, Nigel

        Beckett, Rt Hon Mrs Margaret

        Brown, Rt Hon Nick (Newcastle E)

        Bell, Stuart (Middlesbrough)

        Brown, Russell (Dumfries)

        Benn, Hilary (Leeds C)

        Browne, Desmond

        Bermingham, Gerald

        Burden, Richard

        726

        Burgon, Colin

        Hall, Patrick (Bedford)

        Butler, Mrs Christine

        Hamilton, Fabian (Leeds NE)

        Byers, Rt Hon Stephen

        Hanson, David

        Caborn, Rt Hon Richard

        Harman, Rt Hon Ms Harriet

        Campbell, Mrs Anne (C'bridge)

        Heal, Mrs Sylvia

        Campbell, Ronnie (Blyth V)

        Healey, John

        Cann, Jamie

        Henderson, Doug (Newcastle N)

        Caplin, Ivor

        Henderson, Ivan (Harwich)

        Casale, Roger

        Hepburn, Stephen

        Cawsey, Ian

        Heppell, John

        Chapman, Ben (Wirral S)

        Hesford, Stephen

        Church, Ms Judith

        Hewitt, Ms Patricia

        Clark, Rt Hon Dr David (S Shields)

        Hill, Keith

        Clark, Dr Lynda (Edinburgh Pentlands)

        Hodge, Ms Margaret

        Hoey, Kate

        Clark, Paul (Gillingham)

        Home Robertson, John

        Clarke, Charles (Norwich S)

        Hood, Jimmy

        Clarke, Eric (Midlothian)

        Hoon, Rt Hon Geoffrey

        Clarke, Rt Hon Tom (Coatbridge)

        Hope, Phil

        Clarke, Tony (Northampton S)

        Howarth, Alan (Newport E)

        Clelland, David

        Howarth, George (Knowsley N)

        Coaker, Vernon

        Howells, Dr Kim

        Coffey, Ms Ann

        Hoyle, Lindsay

        Coleman, Iain

        Hughes, Ms Beverley (Stretford)

        Colman, Tony

        Hughes, Kevin (Doncaster N)

        Cook, Rt Hon Robin (Livingston)

        Humble, Mrs Joan

        Cooper, Yvette

        Hurst, Alan

        Corbett, Robin

        Hutton, John

        Corston, Jean

        Iddon, Dr Brian

        Cousins, Jim

        Illsley, Eric

        Cox, Tom

        Ingram, Rt Hon Adam

        Cranston, Ross

        Jackson, Ms Glenda (Hampstead)

        Crausby, David

        Jackson, Helen (Hillsborough)

        Cummings, John

        Jamieson, David

        Cunningham, Rt Hon Dr Jack (Copeland)

        Jenkins, Brian

        Johnson, Alan (Hull W & Hessle)

        Cunningham, Jim (Cov'try S)

        Johnson, Miss Melanie (Welwyn Hatfield)

        Curtis-Thomas, Mrs Claire

        Darting, Rt Hon Alistair

        Jones, Mrs Fiona (Newark)

        Darvill, Keith

        Jones, Helen (Warrington N)

        Davey, Valerie (Bristol W)

        Jones, Martyn (Clwyd S)

        Davies, Rt Hon Denzil (Llanelli)

        Jowell, Rt Hon Ms Tessa

        Davies, Geraint (Croydon C)

        Kaufman, Rt Hon Gerald

        Dawson, Hilton

        Keeble, Ms Sally

        Denham, John

        Keen, Ann (Brentford & Isleworth)

        Dismore, Andrew

        Kelly, Ms Ruth

        Dobson, Rt Hon Frank

        Kemp, Fraser

        Doran, Frank

        Kennedy, Jane (Wavertree)

        Dowd, Jim

        Khabra, Piara S

        Eagle, Angela (Wallasey)

        Kidney, David

        Eagle, Maria (L'pool Garston)

        King, Andy (Rugby & Kenilworth)

        Edwards, Huw

        King, Ms Oona (Bethnal Green)

        Ellman, Mrs Louise

        Kumar, Dr Ashok

        Ennis, Jeff

        Ladyman, Dr Stephen

        Fisher, Mark

        Lawrence, Mrs Jackie

        Fitzpatrick, Jim

        Leslie, Christopher

        Fitzsimons, Mrs Lorna

        Levitt, Tom

        Flint, Caroline

        Lewis, Ivan (Bury S)

        Follett, Barbara

        Liddell, Rt Hon Mrs Helen

        Foster, Rt Hon Derek

        Linton, Martin

        Foster, Michael Jabez (Hastings)

        Lloyd, Tony (Manchester C)

        Foster, Michael J (Worcester)

        Lock, David

        Foulkes, George

        Love, Andrew

        Galbraith, Sam

        McAvoy, Thomas

        Gapes, Mike

        McCabe, Steve

        Gardiner, Barry

        McCafferty, Ms Chris

        George, Bruce (Walsall S)

        McDonagh, Siobhain

        Gibson, Dr Ian

        Macdonald, Calum

        Gilroy, Mrs Linda

        McFall, John

        Goggins, Paul

        McGuire, Mrs Anne

        Griffiths, Jane (Reading E)

        McIsaac, Shona

        Griffiths, Nigel (Edinburgh S)

        McKenna, Mrs Rosemary

        Griffiths, Win (Bridgend)

        Mackinlay, Andrew

        Grocott, Bruce

        McLeish, Henry

        Gunnell, John

        MacShane, Denis

        Hall, Mike (Weaver Vale)

        Mactaggart, Fiona

        727

        McWalter, Tony

        Roy, Frank

        McWilliam, John

        Ruane, Chris

        Mallaber, Judy

        Ruddock, Joan

        Mandelson, Rt Hon Peter

        Ryan, Ms Joan

        Marsden, Gordon (Blackpool S)

        Sarwar, Mohammad

        Marsden, Paul (Shrewsbury)

        Sawford, Phil

        Marshall, David (Shettleston)

        Sedgemore, Brian

        Martlew, Eric

        Sheerman, Barry

        Maxton, John

        Shipley, Ms Debra

        Meacher, Rt Hon Michael

        Singh, Marsha

        Merron, Gillian

        Smith, Rt Hon Andrew (Oxford E)

        Michael, Rt Hon Alun

        Smith, Angela (Basildon)

        Milburn, Rt Hon Alan

        Smith, Rt Hon Chris (Islington S)

        Miller, Andrew

        Smith, Jacqui (Redditch)

        Moffatt, Laura

        Smith, John (Glamorgan)

        Moonie, Dr Lewis

        Snape, Peter

        Moran, Ms Margaret

        Soley, Clive

        Morgan, Ms Julie (Cardiff N)

        Southworth, Ms Helen

        Morley, Elliot

        Spellar, John

        Morris, Rt Hon Ms Estelle (B'ham Yardley)

        Squire, Ms Rachel

        Starkey, Dr Phyllis

        Morris, Rt Hon Sir John (Aberavon)

        Steinberg, Gerry

        Stewart, David (Inverness E)

        Mountford, Kali

        Stewart, Ian (Eccles)

        Mowlam, Rt Hon Marjorie

        Stinchcombe, Paul

        Mudie, George

        Stoate, Dr Howard

        Mullin, Chris

        Straw, Rt Hon Jack

        Murphy, Denis (Wansbeck)

        Stringer, Graham

        Murphy, Jim (Eastwood)

        Stuart, Ms Gisela

        Murphy, Rt Hon Paul (Torfaen)

        Sutcliffe, Gerry

        Naysmith, Dr Doug

        Taylor, Rt Hon Mrs Ann (Dewsbury)

        Norris, Dan

        O'Brien, Bill (Normanton)

        Taylor, Ms Dari (Stockton S)

        O'Brien, Mike (N Warks)

        Taylor, David (NW Leics)

        O'Hara, Eddie

        Temple-Morris, Peter

        Olner, Bill

        Thomas, Gareth (Clwyd W)

        O'Neill, Martin

        Thomas, Gareth R (Harrow W)

        Organ, Mrs Diana

        Timms, Stephen

        Osborne, Ms Sandra

        Tipping, Paddy

        Palmer, Dr Nick

        Todd, Mark

        Pearson, Ian

        Trickett, Jon

        Pendry, Tom

        Turner, Dennis (Wolverh'ton SE)

        Perham, Ms Linda

        Turner, Dr George (NW Norfolk)

        Pickthall, Cohn

        Turner, Neil (Wigan)

        Plaskitt, James

        Twigg, Derek (Halton)

        Pollard, Kerry

        Twigg, Stephen (Enfield)

        Pond, Chris

        Tynan, Bill

        Pope, Greg

        Vaz, Keith

        Pound, Stephen

        Ward, Ms Claire

        Prentice, Ms Bridget (Lewisham E)

        Watts, David

        Prescott, Rt Hon John

        Whitehead, Dr Alan

        Primarolo, Dawn

        Wicks, Malcolm

        Purchase, Ken

        Williams, Rt Hon Alan (Swansea W)

        Quin, Rt Hon Ms Joyce

        Quinn, Lawrie

        Williams, Alan W (E Carmarthen)

        Radice, Rt Hon Giles

        Wills, Michael

        Rammell, Bill

        Wilson, Brian

        Raynsford, Nick

        Woolas, Phil

        Reed, Andrew (Loughborough)

        Worthington, Tony

        Reid, Rt Hon Dr John (Hamilton N)

        Wright, Anthony D (Gt Yarmouth)

        Robinson, Geoffrey (Cov'try NW)

        Wright, Dr Tony (Cannock)

        Roche, Mrs Barbara

        Wyatt, Derek

        Rooker, Rt Hon Jeff

        Rooney, Terry

        Tellers for the Noes:

        Ross, Ernie (Dundee W)

        Mr. Tony McNulty and

        Rowlands, Ted

        Mr. Don Touhig.

        Question accordingly negatived.

      New Clause 5

        ORDERS FOR POSSESSION OF AERODROMES, ETC.
        '.—(1) This section applies in any time of actual or imminent hostilities or of severe international tension or of great national emergency.
        (2) The Secretary of State may by order provide for—

        (a) any aerodrome, and

        (b) any aircraft, machinery, plant, material or thing found in or on any aerodrome,

        to be taken into his possession and used by or for the purposes of the armed forces of the Crown.
        (3) An order under this section may, for the purpose of securing compliance with the provisions of the order—

        (a) provide for the detention of aircraft;

        (b) make such other provision as appears to the Secretary of State to be necessary or expedient for securing such detention.

        (4) A person must comply with an order under this section notwithstanding any other duty, however arising.
        (5) An order under this section may, for the purpose of securing compliance with the provisions of the order, provide for—

        (a) persons to be guilty of offences in such circumstances as may be specified in the order;

        (b) persons to be liable on conviction of those offences to such penalties as may be so specified.

        (6) The power under subsection (5) does not include power—

        (a) to provide for offences to be triable only on indictment;

        (b) to authorise the imposition, on summary conviction of an offence, of any term of imprisonment or of a fine exceeding the statutory maximum;

        (c) to authorise the imposition, on conviction on indictment of an offence, of a term of imprisonment exceeding two years.

        (7) Any person who suffers direct injury or loss arising from compliance with an order under this section is entitled to receive compensation from the Secretary of State.
        (8) The compensation must be of an amount agreed by the person and the Secretary of State or (in default of agreement) of an amount decided by—

        (a) an arbitrator appointed by the President of the Royal Institution of Chartered Surveyors (if the proceedings are to be held in England and Wales),

        (b) an arbiter appointed by the Chairman of the Royal Institution of Chartered Surveyors in Scotland (if the proceedings are to be held in Scotland), or

        (c) an arbitrator appointed by the Lord Chancellor (if the proceedings are to be held in Northern Ireland).'.—[Mr. Raynsford.]

        Brought up, and read the First time.
        The Minister for Housing and Planning (Mr. Nick Raynsford): I beg to move, That the clause be read a Second time.
        Mr. Deputy Speaker: With this it will be convenient to discuss the following: Amendment (a) to the proposed clause, at end of subsection (4) insert—
        'including any duty arising under or by virtue of the European Communities Act 1972 (as amended).'.
        New clause 27—Exercise of powers, duties, and functions under Part I—'The powers, duties and functions given or imposed on the Secretary of State or the CAA in sections 1, 2, 38, 49, 80, 81, (Disposal of shareholding in the designated company) and (Orders for possession of aerodromes, etc.) may be exercised or fulfilled notwithstanding anything contained in the European Communities Act 1972 as subsequently amended.'.
        Amendment No. 382, in clause 1, page 1, line 10, at beginning insert—
        'Notwithstanding anything in the European Communities Act 1972 as subsequently amended,'.

        729
        Amendment No. 147, in page 1, line 14, at end insert—
        '(aa) to ensure that air traffic services are not provided or managed in a manner which might prejudice the national security of the United Kingdom;'.
        Amendment No. 383, in clause 2, page 2, line 5, at beginning insert—
        'Notwithstanding anything in the European Communities Act 1972 as subsequently amended,'.
        Amendment No. 384, in clause 38, page 24, line 14, at beginning insert—
        'Notwithstanding anything in the European Communities Act 1972 as subsequently amended.'.
        Amendment No. 388, in page 24, line 29, at end insert—
        'or
        (c) to relinquish the licence;'.
        Government amendments Nos. 125 and 126.Amendment No. 385, in clause 49, page 32, line 1, at beginning insert—
        'Notwithstanding anything in the European Communities Act 1972 as subsequently amended,'.
        Amendment No. 389, in page 32, line 21, at end insert—
        '(5A) The rights accorded to the Crown by the special share under this section shall not be subject to any limitation that may be imposed through the European Communities Act 1972 as amended.'.
        Government amendments Nos. 127 and 128.
        Amendment No. 386, in clause 80, page 50, line 30, at beginning insert—
        'Notwithstanding anything in the European Communities Act 1972 as subsequently amended,'.
        Amendment No. 387, in clause 81, page 50, line 33, at beginning insert—
        'Notwithstanding anything in the European Communities Act 1972 as subsequently amended,'.
        Government amendments Nos. 134, 129, 135 to 138 and 130 to 133.
        Mr. Raynsford: The theme that unites the new clauses and amendments is the important subject of national security. The Government have proposed amendments designed to improve the Bill further in respect of national security; the Opposition have proposed amendments that are essentially destructive, and based on false assumptions about the interplay between the PPP and national security. I intend to compare and contrast the proposals, because they highlight important differences between the Government's approach and that of the official Opposition.
        8.30 pm
        The Bill already contains substantial measures designed to protect the national interest in respect of security. Clause 81 empowers the Secretary of State to give directions to a range of people engaged in aviation and related activities in times of hostilities, severe international tension or great national emergency. Contravention, or failure to comply with a direction, is an offence punishable on indictment by unlimited fines and/or imprisonment.
        730
        New clause 5 enables the Secretary of State by order made by statutory instrument, but not subject to parliamentary procedure, to provide for taking possession of, and using for the purposes of the armed forces, any aerodrome, aircraft, or other things in or around the aerodrome in the event of actual or imminent hostilities, severe international tension or great national emergency. In other words, it is a power not to direct, but to intervene directly.
        An order made under that power may include provision to secure compliance with the order, including the detention of aircraft. There is an entitlement to compensation from the Secretary of State in the event of any person suffering direct injury or loss arising from compliance with an order under the new clause. In default of an agreement between the claimant and the Secretary of State, provision is made for the amount to be settled by arbitration.
        The new clause allows for greater flexibility in the choice of action that may be taken in times of hostilities. The existing power in clause 81 requires directions to be given to persons as a pre-condition for securing various controls. The new clause allows possession to be taken of aircraft or aerodromes that are the subject of an order without the need first to identify their owners or operators or to give notice. Further, instead of obliging a recipient of a direction to secure that assets are taken into the possession of the Crown, the new clause enables the Crown to take possession directly without relying on the recipient complying.
        Amendments Nos. 125 to 133 are consequential to the new clause. Amendments Nos. 134, 137 and 138 substitute the new term "undertaking" for "business" to match the language in Council regulation 2407/92. Amendment No. 135 omits the requirement for prior consent of the Secretary of State or the Director of Public Prosecutions before a prosecution. Amendment No. 136 is consequential in that it applies to the new clause the definitions in clause 82 and provides for the order to be a statutory instrument not subject to parliamentary procedure.
        Those are wide-ranging powers that reflect the importance that the Government attach to national security measures. Although the contents of new clause 5 were largely present in the Civil Aviation Act 1982, we have introduced it alongside the direction-making power to ensure that the Government have available to them all the means that they may need to defend the national interest at such times. Those are real, tangible protections. I commend them to the House.
        By contrast, the Opposition seek only to fuel fear and suspicion. New clause 27 and the accompanying amendments are simply mischief making. They purport to ensure that the United Kingdom can exercise the functions and powers of transfer and direction under the clauses on the mistaken assumption that what we are proposing would conflict with European law, that European law will develop in such a way as to give rise to such a conflict, or that EU institutions will take over, or replace the Eurocontrol treaty arrangements.
        Those matters were debated ad nauseam in Committee. I hope, although not with great confidence, that we will not end up covering the same ground in the same detail tonight. Although I respect and share the enthusiasm for national security that the hon. Member for North Essex

        731
        (Mr. Jenkin) demonstrated in Committee, I tired of dealing with his fanciful interpretations of European Community law and his scaremongering on Community competence. Indeed, some of us in the Committee suspected that the mere mention of the term "Eurocontrol" was enough to elicit a Pavlovian reaction from him and some of his hon. Friends. The best interests of UK air traffic services are served not by flogging that particular dead horse, but by putting NATS in a position to benefit from the changes that will and must come about in Europe.
        As many of us know from our travels throughout the continent, all is not well in the state of Denmark—or, indeed, in France, Italy, Switzerland and a number of other countries in the core area of Europe—with regard to air traffic management. The reasons are many and complex, but among the most important is the fragmentation of the system, with efficient airspace management being constrained by national boundaries, inflexible allocation of airspace between military and civilian use, and continuing under-investment in the air traffic control capacity needed to meet the relentless growth in air traffic movements.
        In Europe, there are three key organisations in air traffic management: Eurocontrol is the European organisation for the safety of air navigation and has 28 members; ECAC—the European civil aviation conference; and the European Union. However, the EU's role is very limited, being confined largely to technical standards and the like.
        The Government believe that Europe can and must do better. The air traffic management system is crucial for the economic well-being of the continent generally and for the United Kingdom particularly. We are therefore active members of Eurocontrol. There is broad support for the EU's early accession to Eurocontrol.
        The Government are also keen to work with the European Commission on its ideas for "A Single Sky for Europe". We do not necessarily agree with every word in the document, but it represents a genuine attempt to deal with the serious problem that I mentioned earlier, and it offers the United Kingdom a real opportunity to have influence over the way in which those issues will be tackled.
        Mr. John Wilkinson: Does the Minister agree that there is all the difference in the world between the facilitation of air traffic by better use of air traffic control systems and a more efficient Eurocontrol and the assumption by the European Union of a common European airspace? Airspace is a fundamental element of national security and of the sovereignty of individual nation states. Will he help the House to understand whether Ministers are clear in their own minds that the way in which the European Commission is developing its outlook on those matters could have a profound impact on our sovereignty and nationhood?
        Mr. Raynsford: I agree with the hon. Gentleman, and I am glad that he shares my view about the importance of continuing to work actively within Eurocontrol to develop the current arrangements and tackle some of the weaknesses. I made it clear that we do not necessarily agree with every element of the concept of the single sky for Europe. However, we want to engage in a constructive dialogue to ensure that there is effective movement across the continent as a whole.
        732
        Nothing could be more damaging both for the economic future of Europe—the United Kingdom is intimately connected with that—and for the safety of air traffic and the development of air traffic services than a failure to achieve the necessary integration when that is required, particularly in bearing down on some of the problems and pressure points in current arrangements. We shall therefore approach the matter pragmatically, but positively—engaging in Europe to improve the standard of services.
        Mr. Jenkin: To pursue the issue raised by my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson)—I have pressed the Minister on that before—will the Minister acknowledge that if the EU becomes a member of Eurocontrol, it will acquire exclusive competence both externally and internally in all matters to do with airspace policy? When the European Commission joined the general agreement on tariffs and trade, it took control of trade talks. When it joined the international patents organisation, it took control of international patents. When it joins an international airspace management organisation, it will take over competence in airspace matters. That is the purpose of the European Union's single sky programme.
        Mr. Raynsford: The hon. Gentleman confirms my fear that we would hear more of his fanciful views on the European Union's aspirations completely to take over and transform the nature of organisations. That is not the agenda. There is a straightforward proposal for the European Union to become a member of Eurocontrol. We are more than happy to discuss and consider that, and we believe that there is a general support for it. The fanciful suggestion that that will involve the total transformation of Eurocontrol's framework and of the role of individual member states is one that is lodged solely in the hon. Gentleman's wilder fantasies.
        We are committed believers in Eurocontrol, but it is not beyond improvement. Indeed, the problems that we face in Europe today suggest strongly that that is the case. We are keen to see the organisation's regulatory role made quite separate from its service provision arm. Therefore, in the coming year, we shall also be working hard to secure change.
        In Committee, the hon. Member for North Essex suggested that our aims were somehow at variance with Community law and Community policy, both current and prospective. The UK is a member of the European Community and bound by its treaties, legislation and case law. The Secretary of State inevitably will be bound to exercise the functions and other powers highlighted by the amendments and the new clause—and any other powers in the Bill—so as not to be inconsistent with Community law. We are satisfied that our proposals are not inconsistent with those obligations and that law.
        Mr. William Cash: Would the Minister explain why the new clause refers to duty rather than function?
        Mr. Raynsford: Is the hon. Gentleman referring to our new clause 5, or the new clause tabled by the Opposition?
        Mr. Cash: I am referring to subsection (4) of new clause 5. It says—
        Mr. Raynsford: I am aware of what it says.
        Mr. Cash: The Minister is not aware of anything else by the sound of it.
        Mr. Raynsford: I do not share the hon. Gentleman's European fantasies. The new clause states:
        A person must comply with an order under the section notwithstanding any other duty, however arising.
        That provision is extremely important, and is necessary to ensure that, in times of emergency, the Government can act.
        The hon. Gentleman will recognise that it would be difficult if another party were to prevent the Secretary of State from taking control of assets, such as an aerodrome or aircraft, by threatening legal action under whatever pretext. He will undoubtedly see a European dimension, but this is drafted for far wider purposes—to ensure that there is the power for the Secretary of State to act in these specific circumstances without the risk of legal challenge.
        Mr. Cash: I asked the Minister a simple question. Why does the word duty appear, and not function? In addition, has he read the title on the provisions on a common foreign and security policy in the Amsterdam treaty, which his Government brought into effect?
        Mr. Raynsford: I feared that we would get into this kind of detailed textual analysis. The explanation that I gave was full and straightforward. We are creating a power to enable the Secretary of State to act effectively in national emergencies without the risk of challenge. That is the purpose of the proposal. There is no hidden European subtext.
        Sir Robert Smith: Where did the concept of a great national emergency come from? Has that been defined in previous legislation?
        Mr. Raynsford: It appears in clause 81 of this Bill. New clause 5 is designed to mirror clause 81, which gave the power to issue directions. New clause 5 gives the power to act directly to take control of assets. That is important for the reasons that I outlined, and the wording of the two clauses is totally analogous and refers to the same circumstances.
        Mr. Iain Duncan Smith: When the Minister says that there will be no legal challenge, does he believe that anyone who presumed that the Government's actions were beyond the scope of the requirements in the European treaties would therefore be unable to take legal action?
        Mr. Raynsford: This proposal is drafted with a view to protecting the national interest in a situation of emergency where it is necessary for the Government to act. That proposal was inserted to give the Secretary of State the power to act without the risk of such a challenge. There is always the possibility that someone will seek to challenge such an action, but in any case brought before
        734
        the courts, it will be clear that there is a power giving the Secretary of State the ability to intervene in this way. The obligation is a clear way of saying that. That is the purpose behind the proposal.
        8.45 pm
        Mr. Duncan Smith: I believe that the Minister is leaving a caveat to what he said earlier and saying that if such a challenge takes place, the higher duty is to European law and overrides the Bill.
        Mr. Raynsford: I suspected that the hon. Gentleman was going in that direction. I remind him of what I said earlier. The Government are clearly bound by our international treaty obligations and we must act in compliance with European law. The provisions are compatible with that, for reasons that I will explain in a moment. The fantasy conjured up by the hon. Member for North Essex in Committee, whereby the Government are unable to protect the national interest because European law takes precedence is no more than that: a fantasy.
        We are a member of the European Community and will respect its legislation and case law. We are satisfied that the measures that we are taking are consistent with our obligations. Conservative Members believe that developments in Europe will inevitably lead, with or without the consent of the United Kingdom, to a situation in which our policies and practices on all matters affecting the use of airspace and the provision of air traffic services will be dictated from Brussels.
        We spent a lot of time in Committee on textual analysis of the treaty of Rome, its amendments and cases taken under it dealing with Community competence in matters of national security. As I made clear then, we are satisfied that our ability under the treaty to take measures to protect national security is not impaired by the case law cited by the hon. Member for North Essex as evidence of an imminent erosion of sovereignty. The case was not proved in Committee and we provided decisive rebuttals.
        It is a fact that national and international law develops over time, and I submit that to behave like Canute is not the best means of ensuring that our view on the way forward for air traffic services influences the approach taken by the Community and by Europe generally.
        I make no apology for playing a full part in the current discussions on how all European Governments can best act together to meet the challenges presented by ever more crowded airspace and a plethora of service providers. The current situation cannot be sustained indefinitely and those with the most forward-looking approach to both airspace management and service provision will be those whose future is best protected. That is very much one of the guiding principles behind the PPP, and I reject wholeheartedly the case for new clause 27 and its attendant amendments.
        Mr. Dalyell: When are the current discussions, which are very important, likely to reach a conclusion? There is considerable interest in the matter.
        Mr. Raynsford: I cannot give my hon. Friend a date, because it is not known generally when the discussions will reach a conclusion. They are continuing and I suspect that they will continue for the rest of the year. I undertake

        735
        to write to him to give him further news of when progress is likely to be made on some of these rather important issues.
        I urge the House to support new clause 5 and its attendant amendments.
        Mr. Duncan Smith: The Minister, who dealt with these matters in Committee, may wonder why I am standing at the Dispatch Box. It is not because I favour him and therefore want to give him some light relief from my hon. Friend the Member for North Essex (Mr. Jenkin)—I know that he will have withdrawal symptoms as a result of my hon. Friend's absence—but because, having read what took place in Committee, I took the view that the matter was serious enough to merit the attendance of a spokesman on defence matters. I consider national security to be of overarching importance and I think that serious questions relating to defence remain following the exchanges in Committee, which is why I am here, with due deference to my hon. Friend.
        In addressing the amendment and other similar amendments that apply to other parts of the Bill, I wish to establish whether clauses 38 and 81, and particularly new clause 5, will address the concerns about the control of our airspace, and thus important issues of national security. I shall return to some of the issues directly arising from the clauses, but I shall begin by trying to establish why the matter is peculiarly important given the nature of the Bill.
        It is important to state from the outset that my main concern is not particularly the critical time of war or even the run to war which may be well established, with the security environment setting the tone of the Government's behaviour. It has more to do with the security issues that arise as a result of military training and operation in and around our existing airspace. In an earlier debate, the Secretary of State referred to a document that has just been published. I have not seen it because it is not in the Library. As the right hon. Gentleman referred to it, I should be grateful if he let us see its contents.
        On 10 February, in Standing Committee, the Secretary of State referred to schedule 8 in respect of the unique relationship between our defence air traffic controllers and the civil controllers at NATS. That relationship is quite different from that in any other country. We run our airspace in a way that is very efficient compared with America or France which have corridors dedicated to their military airspace and separate their military controllers from the civil controllers, with all the difficulties that that entails. As the RAF do not have corridors and their controllers work cheek by jowl with their civil counterparts, they make efficient use of the airspace. Their unique relationship is both efficient and ensures greater safety within the running of the service, so it has a peculiar extra dimension.
        That close relationship relies on a significant amount of trust—an awful lot is not written down, but has always operated in a certain way and works well. For example, if the RAF says that it needs certain airspace, or if for reasons of national security it wishes to block out sections of airspace for a particular time, it is agreed very quickly with NATS, with hardly any interrogation and the RAF gets the airspace that it requires without much quibbling.
        My concern is that any private company that takes over the running of NATS will have a different relationship with the RAF. The relationship will, by necessity, change.
        736
        The new company may be under foreign ownership. It is clear from what my hon. Friend the Member for North Essex said earlier that that is certainly a possibility. In any case it will be affected by who owns it, regardless of whether it is a foreign company or a British one. The private company will come under increasing pressure to use the available airspace for commercial purposes. It follows, therefore, that it is unlikely that the relationship with the RAF will remain the same as at times, the RAF requirements will conflict with the commercial usage of that airspace.
        Our amendments to clauses 38 and 81 and new clause 5 arise from the fact that the Government will be under increasing pressure to invoke the powers granted to them under those provisions more often than they anticipate. No doubt that is why the Government drafted them. Our amendment goes to the heart of the issue: how effective such clauses are likely to be and whether they address the relevant circumstances.
        The first aspect that needs to be investigated is whether the clauses really do run foul of the interpretation of existing European law and whether the Government will find it difficult to invoke them successfully over the next few years.
        Unless an amendment such as that tabled by my hon. Friends is accepted by the Government—or even addressed—they will open themselves to a progressive series of challenges in the commercial domain from companies that disagree with the application of the clauses. I do not believe that the term "national security" will hold any particular power over the controlling company—it will still challenge where it believes it to be necessary.
        The Minister referred to the detailed rebuttal that he gave in Committee. Therefore, it is necessary to ask why he believes that he successfully rebutted the arguments of my hon. Friend the Member for North Essex. These concerns in particular were raised in Committee. The Government rested their position, and their objection to our concerns about the functioning of the Bill under European law on their belief that, as the Minister said, national security is protected under European law. The Minister referred to a judgment made on 26 October 1999 by the European Court of Justice in the case of Angela Maria Sirdar and the Army Board, Secretary of State for Defence. I do not want to go into details; I know that the hon. Gentleman has been round this fence a few times. However, when he partially referred to paragraph 17 of that judgment, he did himself a disservice. He said that the concept of public security covers both a member state's internal security and its external security. On that, he rested the view that that judgment had made it clear that national security was enough to block off any further challenges through the European Court of Justice. I believe that he was fundamentally wrong.
        It was in that particular case that the European Court of Justice made a clear statement, for the first time, that it had a right to rule on issues of national security. It prepared itself the position to say that simply saying national security is no longer good enough.
        The Minister failed to show in Committee that the court no longer considers that any member nation has a general treaty exception for reasons of public security. In paragraph 16 of the judgment, the court said:
        To recognise the existence of such an exception, regardless of the specific requirements laid down by the Treaty, might impair the binding nature of Community law and its uniform application …

        737
        Furthermore, exceptions on the nature of public security are based in this case on derogations of four particular articles. The court has taken a progressively narrow view, over the years, on the way in which derogations should apply, especially if they run counter to the ethos of the market place or the single market.
        It is interesting that the Minister should use that case to show that the court did not take a decision against the British Government because of the derogation. In fact, the court made it clear that it considered that it had a full right to revisit these exemptions as and when it saw fit. That is borne out by a judgment on 11 January 2000 in the case of Tanja Kreil and the Bundesrepublik Deutschland. There, the court ruled against the German Government, who had defended a position that they were taking in front of the court for reasons of national security. On this, the court was quite clear. It said:
        the question is therefore whether, in the circumstances of the present case, the measures taken by the national authorities, in the exercise of the discretion which they are recognised to enjoy, do in fact have the purpose of guaranteeing public security and whether they are appropriate and necessary to achieve that aim.
        Furthermore, the court moved on the issue of derogations by showing that it would allow the use of derogation in this field only if that provision was interpreted strictly.
        Thus, in a matter of weeks, the European Court of Justice first established the right to rule on concepts of national security and then went on to use the same basis subsequently to reject the German Government's position. The British Government, in the form of the Minister, used the Sirdar case, so I think it fair to continue down that road and use the next case up.
        I deliberately referred to these two cases, because the Minister, in his justification for the Government's position that the new clause, and the clauses already in the Bill, will succeed, prayed in aid the Sirdar case.
        Mr. Cash: My hon. Friend makes an honourable case. Given the uncertainties, the vagueness, conflicts and contradictions that are contained under the case law to which he has referred and the enormous number of variations that can occur, could anyone imagine any consistent policy emerging under new clause 5? That provision would apply
        in any time of actual or imminent hostilities or of severe international tension or of great national emergency.
        One would have to go through a quagmire of legalised contradiction. Would not British national interests and national security be severely prejudiced as a result?
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        Mr. Duncan Smith: If my hon. Friend will bear with me, we shall deal with that argument later on. I agree with him, but I shall cover the point more powerfully in another part of my speech.
        In Committee, the Minister prayed in aid the Sirdar case for the success of his provisions. I was concerned by another of his comments. Perhaps under advice from an official—although not, I hope, one who had studied European law—the Minister quoted article 297 of the treaty as the defining moment showing that our concerns and worries were wrong.
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        The Minister said that the exercise of powers under clause 81 would be entirely consistent with the treaty—in other words, that national security and thus the exercise of derogations, and so on, were sacrosanct in the eyes of the Court. However, I have taken advice on the matter and article 297 means the opposite of that. It is important to re-read the article. It is about how a clash with the ECJ and the acquis communautaire would be remedied. The article states:
        Member states shall consult each other with a view to taking together the steps needed to prevent the functioning of the common market being affected by measures which a Member State may be called upon to take in the event of serious internal disturbances affecting the maintenance of law and order, in the event of war, serious international tension constituting a threat of war, or in order to carry out obligations it has accepted for the purpose of maintaining peace and international security.
        In effect, it states that one cannot act without consulting all parties within the EU—including the Commission—and adjusting one's actions accordingly.
        if the Minister had read on, he would have seen that article 298 kills his argument completely. Article 298 makes it clear that, if the Commission takes the view that the Government have acted in a way that distorts the marketplace, it can take the Government to the ECJ on an accelerated proposal.
        The treaty takes a view about a member state making what the treaty determines and the Court then decides is improper use of legislation. The Minister's firm ground in Committee is now very shaky indeed. If the Government felt it necessary to use these provisions to protect national security, there are serious doubts that they would succeed, and that they would not have an injunction placed on them. They need to face up to that problem.
        The Government must also face up to some other difficulties presented by their provisions. Their stance is not absolute. There is a progressive process that is likely to give a private company the reason and opportunity to challenge the Government's interpretation of national security—not in great moments of crisis and conflict but, when there is a military requirement for airspace, they may find themselves in some difficulty.
        Let us move on to other aspects of the clauses. What will happen if, for example, the Government have security concerns about an employee or employees of the future privatised company? Those concerns might not necessarily arise during a conflict, but in a normal working year when the Government do not have a specific conflict in mind. Clause 38 does not deal with that point even though it should. The Government may decide that certain people pose a security risk to the running of the company, particularly given its relationship with military controllers, but the clause gives them or the company no powers to insist that those people are not employed for security reasons.
        In Committee, my hon. Friend the Member for North Essex referred to the security difficulties of the Kosovo operation. I cite a more obvious example. The French take a different view on the use of our military in Iraq and there may be differences that could lead the Government to decide that a person employed may cause a security breach or lapse as a result of his close connection with the military on the control of airspace. The Government should have addressed that problem in clause 38, but they

        739
        have not done so. I urge them to think carefully about it and, if necessary, to table further amendments. At present, the clause is flawed.
        Even if the Government want to use another device to stop someone being employed, they will face difficulties. The European security and defence identity process will mean that anyone from the Commission to the European Court will take the view that, because we are in a common defence position, it is difficult to say that a security risk arises in relation to any other member of the European Union. Because the Government have not addressed the problem in clause 38, they have no hook on which to hang that objection. That will create a huge problem for them in the future.
        Why does clause 38 not refer to compensation if the Government intend to use the devices available to them? What will happen if there is no compensation provision? Clause 81 and new clause 5 contain such a provision, but if a private company is aggrieved by the provisions employed in clause 38, it will want to take redress in legal processes.
        Mr. Raynsford: It might help if I point out to the hon. Gentleman that he has misread clause 38, which is about giving directions. He will surely understand from what I said earlier that there is a distinction between new clause 5, which allows for powers to seize assets and where compensation is clearly appropriate, and the provisions that give directions to the licence holder to act in a certain way. He must recognise that, if there is a fear about the security rating of an individual, that matter can be well covered by the provisions in clause 38(2).
        Mr. Duncan Smith: I hear what the Minister says. On compensation, the directions to which he referred could, and are likely to, lead to claims for compensation because the directions might result in changes of operation. As a result of that, the company might claim that there is problem. The Minister dismisses all the arguments as though the Government have arrived with a tablet of stone that cannot be changed. I simply point to a problem.
        I do not think that the Minister's other point about whether it is possible to dismiss someone is covered by the clause. He should take serious legal advice, because a company is bound to challenge the provisions.
        Under the combinations of events that I have described, a private company is more likely to make a challenge over the issue of national security. The vagueness of some of the wording will, I suspect, lead to further challenges to the Government in the European Court. Clause 81(2)(e) says that the Government may give directions to
        a person who owns or operates a relevant asset.
        That phrase is so vague that any decision made under the clause in that respect will almost automatically be challenged.
        I return to paragraph 26 of the Sirdar judgment that the Government were so keen to pray in aid in Committee. When the issue of national security is invoked, the court states:
        That principle requires that derogations remain within the limits of what is appropriate and necessary.
        I have genuine and serious concerns about the Government's overall position on national security. This is not an argument for or against privatisation. However,
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        by the Bill, the Government have opened the door to an issue that was not necessarily questioned previously. It is not enough for the Government, without any serious comment or explanation about our relationship with the European Union, to say that they rest on their own strange belief that all will be well because everyone will trust the Government's judgment.
        I sat on the Government Benches when the Conservative Government were in office. I remember Conservative Ministers often saying exactly the same thing. There was almost deja vu when I read some of the Minister's comments in Committee and set them against those made by some of his predecessors within the Conservative party when they were in government. In so many cases they found themselves eating their words two, three or four years later. In each instance they said that they could not have anticipated that the court would move in a particular direction. The Minister should take note of that. Unless he finds his own words an excellent diet, he should be prepared to find himself in deep difficulties in a few years' time.
        There is a unique relationship that I would wish to see replicated if a private company is to take over the running of our airspace. That is unlikely as long as the Government fail to accept our amendments or fail to recognise that there is an issue which poses the question, "Who controls our airspace?" That is the key. Throughout consideration of the Bill in Committee the Government failed to answer that question. If they do not do so tonight, the issue of national security remains live and may yet pose huge problems for the implementation of the Bill when it is enacted. When the Government need the legislation, it will not be there. I am deeply concerned.
        Mr. Brian H. Donohoe: I shall speak to amendment No. 147, which stands in my name. I shall be brief in asking my hon. Friend the Minister two specific questions.
        First, the Government have introduced a provision that suggests that ownership can be taken down to 25 per cent. If what I have learned in the Select Committee on the Environment, Transport and Regional Affairs is anything to go by, a foreign company is almost certain to be the successful bidder. I am concerned about national security. The Government talked originally about a public-private partnership, and I want to know why the Government would accept a 25 per cent. shareholding. Surely this must have a major effect on national security. I want to have some assurances that that is not the position.
        During the discussions of the Select Committee, one of the most interesting episodes was a meeting with the senior management of National Air Traffic Services. We talked about expansion and they said that our technology was potentially at the leading edge. They added that that would lead to the possibility of us participating in foreign air traffic control. I believe that there could be problems if the Government were to have any shareholding in air traffic control.
        Let us say that the Government maintain their 49 or 46 per cent. holding, a private company is taking control and it decides that it will invest in, for example, Russian air traffic control. There is always the potential for a problem in that airspace. Were there to be a major incident with two airliners crashing, what would be the political and diplomatic implications of such an

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        investment? In those circumstances, the British Government could be under an A-bomb if there were such an incident in foreign climes. I did not receive a reasonable response on that until the directors of NATS told me that they could not foresee NATS making foreign investments while it had even a single share in publicly owned companies in this country.
        9.15 pm
        Is that the case? Have we been debating the inevitability of privatisation and are we moving down the road to full-scale privatisation? The technology that we have been told will come on stream at Swanwick and, I assume, Prestwick, could not be used abroad under the auspices of shareholdings still maintained by the public sector and the Government. I would be obliged if my hon. Friend the Minister would reply to that in his summing up.
        Mr. Cash: We are debating a transport Bill, but at the heart of this evening's debate is new clause 5, which deals with the defence of the United Kingdom.
        Let us imagine going back to, say, 9 May 1940. Tomorrow happens to be my birthday, and it is also the anniversary of the day that Churchill became Prime Minister and, unfortunately, the day on which the Germans invaded the Lowlands. The RAF obtained its first Victoria Cross when Maastricht was invaded on 10 May 1940. [Interruption.] If the Minister would be good enough to listen to my speech for a couple of minutes, which he is obviously incapable of doing—
        Mr. Raynsford: The hon. Gentleman has been a Member of Parliament for a long time, so he will know that it is perfectly possible for Ministers to pay attention to the debate and, at the same time, have brief discussions with Whips on matters relating to complex procedures such as those being followed tonight. I hope that he will be less offensive in future.
        Mr. Cash: I have no intention of being any less offensive.
        Mr. Deputy Speaker (Mr. Michael Lord): Order. Perhaps the hon. Gentleman would return to the subject that we are debating.
        Mr. Cash: Would the Minister be good enough to tell me what I have just said?
        Mr. Raynsford indicated dissent.
        Mr. Cash: Obviously he was not listening, as it seems that he has not the faintest idea of what I was talking about. I have therefore made my point.
        The new clause concerns the inherent contradictions between the defence of the realm and the Bill's provisions. The Minister referred to our obligations. Subsection (4) of the new clause, which I mentioned earlier, refers to the duty imposed by the Secretary of State. However, if the Minister refers to the European Communities Act 1972, he will see that section 2 clearly states:
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        in the exercise of any statutory power or duty, including any power to give directions, or to legislate by means of orders—
        to which new clause 5 relates—
        rules, regulations or other subordinate instrument, the person entrusted—
        meaning the Minister himself, if only he would listen—
        with the power or duty may have regard to the objects of the Communities and to any such obligation or rights as aforesaid.

        I heard the Minister say that my hon. Friends on the Front Bench were living in a fantasy world. However, the provisions that he will introduce in the new clause are mirrored in the provisions of section 2 of the 1972 Act.
        The fact is that there is no absolute requirement with respect to duties, but there is a reference to powers. That is why, in an intervention, I asked the Minister, who obviously could not answer, why the Government chose to refer to duties rather than functions. The Minister may not understand the provisions that he is introducing, but the fact is that the word "duty" is carefully chosen, because the word "functions" would include "powers". With that, we enter the arena of the provisions of title V of the Amsterdam treaty. The Minister can shake his head, but he cannot avoid the reality that everything I am saying will happen in due course.
        I do not need to go into the details, because they are as clear as daylight. The interaction between the provisions of the Amsterdam treaty, of clauses 38 and 81 and of new clause 5 will reveal that they are inherently contradictory. There is no possibility that anyone will be able, in the defence of the realm, to know exactly what is going on. As my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) said, there is no way, in the event of imminent hostilities or a great national emergency, that anyone will have the opportunity to plough through all the case law and the requirements that have been laid down.
        The Minister did not listen when I spoke about incidents that occurred 60 years ago, almost to the day. In those days, we were able to send Spitfires and Hurricanes to defeat an enemy. If new clause 5 is to have any credibility, it must be able to deal with situations of the sort that I described—if it cannot, why bother to introduce it? If there is no reason for concern about national security or the defence of the realm, there is no need to bother with new clause 5—it is irrelevant.
        The fact that the Government have introduced the new clause, albeit at the end of our proceedings on the Bill, is an admission that the defence of the realm does matter. It follows that all the provisions must be workable. The Minister shakes his head and in so doing tells the House and the nation that he is not perturbed in the slightest by the fact that there might be contradictions between various provisions of the Bill. However, I believe that the time will come when those deficiencies and contradictions emerge. If they do not become obvious, it will only be owing to the Minister's good luck.
        The bottom line is that there are huge contradictions. It would take far more time than is available to me tonight to go through them all. I only hope that the Minister and his advisers are prepared to look again at the provisions to establish whether or not they are right. The question of whether I am right or they are right is secondary to that of the national interest. We are dealing with defence of the realm. The Bill's many other important provisions relating to transport will pale into insignificance if the clauses that we are dealing with now go wrong.

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        The Government's new clause states:
        This section applies in any time of actual or imminent hostilities or of severe international tension or of great national emergency.
        It is impossible that the need for such a provision was not anticipated when the Bill was first drafted. Why, then, is it being introduced at the tail end of proceedings, by way of a Government new clause? I should like to add, on a conciliatory note—
        Mr. James Gray: Do not get carried away.
        Mr. Cash: I shall not. While I do not want to be offensive, I want to be direct. That the Minister is not a Defence Minister is not his fault, but I have to tell him that, if the new clause was drafted in consultation with the Ministry of Defence, he has not done the job properly.
        if the Minister looked—it would take far too long to go through it—at the research paper published by the House of Commons Library international affairs and defence section on 21 February this year, "European Defence: From Pörtschach to Helsinki", he would note that there is now a new EU military structure. That structure clearly identifies the roles of the commander-in-chief and the extent to which—this might come as a surprise to the Minister, who is not in the MOD—it is anticipated that our potential adversaries have weapons of mass destruction.
        Therefore, under the confines of title V of the Amsterdam treaty, which was passed by this Government, there is a defence dimension. [Interruption.] If the Minister thinks that that is funny, the matter will haunt him if and when things go wrong. I am amazed by the Minister's reaction to the proposal because his new clause does not stand up. Has he consulted the MOD?
        Mr. Raynsford: Yes.
        Mr. Cash: Has the Minister read or understood title V of the Amsterdam treaty? Can he reconcile the provisions of new clause 5, and clauses 81 and 38 to the extent that the people of this country will be satisfied that, if the lights go out, they will be properly defended and not simply left at risk as a result of this confused, vague, contradictory Bill?
        Mr. Wilkinson: I am most grateful—I think that the whole House will have been—to my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) for taking part in the debate on new clauses 5 and 27 and relevant amendments that deal with national security. I will not follow all the detailed arguments that he adumbrated, but I stress that the Government have done well, even at this late stage, to introduce, under new clause 5, powers of requisition in time of national emergency or war of aerodromes, aircraft and relevant equipment. That is entirely appropriate but insufficient without the provisions of new clause 27.
        The acquis communautaire is viewed as something in the past and static, but we are legislating for many years to come. The acquis communautaire is always growing; to my knowledge, there are no examples of it receding. The competence of the European Union in matters relating to civil air transport and aviation are clearly growing. The evidence is plain. Let us consider recent examples.
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        There is the question of bilateral air service agreements. Previously, they were always a matter entirely of national competence—and rightly so. Let us consider questions of capacity on routes, frequencies of service and gateways to or from which those services are operated. Let us consider the matter of slots. The issue of frequency of operation at airports and the facility for airlines to operate from an airport at certain intervals have been jealously guarded, and in this country normally regulated by voluntary mechanisms at individual airports. The European Commission now wishes to take that over, and that has great significance.
        My hon. Friend the shadow spokesman and, obliquely, the Minister, spoke about the EU' s ambition to take over Eurocontrol. Eurocontrol would in essence become an agency of the European Union, rather than, as hitherto, a mechanism for mutual co-operation between sovereign, independent nation states in the whole of Europe, to facilitate the efficient management of air transport through the crowded and congested airspace of our continent.
        9.30 pm
        There is a huge difference between the new concept and the system that we operated in the past, which, despite differences of specification and equipment between nations, the requirements of the military and so on, has worked reasonably well. There has always been a need for improvement. At holiday times, the congestion on the airways can be severe, and Eurocontrol has much work to do, but it should be done in co-operation with national Governments, voluntarily. The issue is technical, rather than political.
        Then there is the matter of joint airworthiness requirements. Aircraft are now built to European standards of certification, and aircraft imported into our continent are validated to European standards—joint airworthiness requirements.
        Flight crew licensing is a controversial issue, on which we have had debates. The European Civil Aviation Conference has imposed new continentwide regulations which it is eager to impose on flight crew in this country. Those are costly and less effective than the simpler and more straightforward regulations under which air crew have been licensed in the past in the UK.
        It is clear from all that that the European Union has hegemonistic aspirations in airspace management. To imagine otherwise is to be blind to the way in which the EU has developed in recent years. The Government would therefore be wise willingly to incorporate new clause 27 into the Bill.
        Under clause 81(4)(a), the Secretary of State would have powers to give directions
        to regulate or prohibit (absolutely or subject to conditions) the navigation of all or any descriptions of aircraft over the United Kingdom.
        If that were challenged by the European Union, as it probably would be, it could cause our Government great difficulty unless we made it plain that British law had precedence over European law in this matter.
        Mr. Duncan Smith: My hon. Friend makes a good point, which I had hoped to raise with the Minister, and I shall do so now. If the measure were challenged under article 298 of the European Union consolidated treaties,

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        it would not be a defence for the Government to invoke the concept of national security and claim that they are unable to define the requirement exactly because of national security, as article 298 states:
        The Court of Justice shall give its ruling in camera.
        That means that the court will require detail of the reason, which the MOD may not wish to give.
        Mr. Wilkinson: I am grateful to my hon. Friend, who puts flesh on the bones of my argument.
        Under subsection (4)(b), the Secretary of State would also have powers to give directions
        to regulate or prohibit (absolutely or subject to conditions) the use, building, maintenance or establishment of aerodromes or flying schools or of any description of aerodrome or flying school.
        Those are commercial or industrial matters, and again the European Union could understandably claim that its industrial policy should have precedence over our national considerations of sovereignty and independence.
        I urge the Government, even at this late hour, to think again. We are not being fanciful. We are not having flights of wild imagination. We are not carried away with Europhobia or anything of the kind. Our arguments are intensely realistic. The Minister is a reasonable man, who has a great grasp of detail. I hope that he appreciates that our arguments have force, and that he will accept them.
        Mr. Raynsford: We have had an interesting debate, punctuated by Opposition Members' anxieties about the imagined impact of European Union obligations on national security. Perhaps it would help if I summarised the basic thinking behind the amendment. We have not tabled the new clause at such a late stage simply because of an oversight; we believed that it was necessary to add a further provision in addition to clauses 38 and 81.
        As I explained earlier, we believed that it was appropriate to grant the Government direct powers of intervention rather than depending on directions, for which clause 38 provides. I hope that we have made a convincing case for the importance of quick action by Government in times of national emergency. New clause 5 would facilitate that.
        Mr. Jenkin: I want to pursue a point that my hon. Friend the Member for Stone (Mr. Cash) made. New clause 5(4) states:
        A person must comply with an order under this section notwithstanding any other duty, however arising.
        What other duties does the Minister envisage?
        Mr. Raynsford: The new clause is clear. It states "notwithstanding any other duty". That is a clear and firm statement of intent. As I explained earlier in response to the interventions of the hon. Member for Stone (Mr. Cash), we believe that the Secretary of State should be able to act without fear of challenge from a party that would try to use the courts to frustrate the Government's action. The Bill includes provisions to enable the Secretary of State to act decisively and to make it clear that no other duties will override that for which the Bill provides.
        Mr. Jenkin: Let us suppose that our fantasies are realised and a duty to comply with a contractual
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        obligation arose under European legislation. Would that duty be set aside under new clause 5? Does the new clause apply to any duty under European Community law?
        Mr. Raynsford: I shall have to repeat my response. I am sorry if it is becoming tedious for my hon. Friends, but it is clear that Conservative Members are finding the point difficult to grasp. We are satisfied that our measures are entirely compatible with our treaty obligations. We do not accept Conservative Members' analysis—or fantasy—about a perceived or real conflict between European treaty obligations and the Bill. I shall consider that point in detail later.
        Mr. Cash: If the Minister would be kind enough to consider title V of the Amsterdam treaty, perhaps he would concede that it provides that we "shall" comply with a range of provisions, but that in the case of a common action plan, we "may" have to comply with specific provisions, subject to qualified majority voting. We are considering not only duties but powers. I therefore asked the Minister why the new clause did not refer to "functions", which include powers and duties, instead of merely to duties.
        Mr. Raynsford: In the nicest possible way, I tell the hon. Gentleman, who is becoming a little tedious, that the Bill is drafted with a view to achieving clarity rather than indulging the fantasies of hon. Members who spend their time immersed in textual analysis of obscure European provisions.
        To come to the point, we have introduced the provisions to ensure that the protection of the national interest and national security is unequivocal. The hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) asked whether the change of ownership could prejudice joint civil and military operations. He mentioned the Joint Air Navigation Services Council document, to which my right hon. Friend the Deputy Prime Minister referred. I shall pass him a copy, but I assure him that it makes it clear that that body believes that the new arrangement will
        preserve the successful civil/military relationship that currently exists between NATS and the MOD and ensure that air traffic services are sustained on a joint and integrated basis, post PPP.
        The MOD has been closely involved in the preparation of the provisions and is fully content that under the PPP its joint working arrangements with NATS will be maintained effectively and that national security will not be compromised.
        I make it clear that the choice of strategic partner will depend on several factors, one of which will be the ability to demonstrate an appropriate security culture. Under the terms of the licence, we shall be able to prevent unacceptable changes in the control of NATS on national security grounds.
        The hon. Gentleman asked who would control our airspace. I make it absolutely clear that UK airspace remains under UK control regardless of who is the strategic partner. Air traffic services will be provided under a licence, which may be revoked, or the special administration regime may be triggered if the licence conditions or the statutory duties, including safety duties, are breached.
        The other main thrust of the hon. Gentleman's remarks relate to the competence of the European Commission and the European Union. The Commission has seen the Bill's

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        text and has not suggested that there is any conflict between any of its provisions and the requirements of the treaty. Of course, I do not expect Conservative Members to accept that.
        Mr. Duncan Smith rose—
        Mr. Raynsford: I will give way in a moment, if the hon. Gentleman restrains himself. Conservative Members demonise the Commission, so the idea that it can have had a sensible and intelligent discussion with us about the provisions is completely alien to their nature, but if they return from fantasy land to the real world, they will realise that that is the reality.
        Mr. Duncan Smith: The hon. Gentleman says that we demonise the Commission, but if I were part of the Commission, I would have exactly that opinion. It falls in with our argument—the Commission is content because the provision lays the Government open to the future policies that we have discussed.
        I ask the Minister a simple question. He mentioned the action that the Government may take under new clause 5, or under clauses 38 or 81, but especially under new clause 5(4), which includes the words:
        notwithstanding any other duty, however arising.
        He said that in the clear belief that no other duty will matter, because the derogation on national security is absolute, but he should remind himself that the derogation exists for only four articles of the treaty of Rome. There is no derogation on any other article. Beyond those four, the Government will face a clash of duty, and the duty will be to European law.
        Mr. Raynsford: Despite the hon. Gentleman's continued attempt to muddy the waters by suggesting that the EU will have competence in matters beyond those in which it already has competence, it cannot rule on matters that are outside its treaty competence, and a court cannot provide competences that do not exist. The treaty does not confer competence with regard to national security and defence. We have exhausted that issue, and I shall not spend much of my time fruitlessly reading documents that the Conservative party has consistently misinterpreted year on year—a fact that explains its curious position on Europe.
        9.45 pm
        Mr. Jenkin: Would it be legal to invoke the golden share on grounds of national security?
        Mr. Raynsford: The golden share is there to preserve a number of national interests, and can be used in respect of national security issues as well as other matters. We have dealt with the issue of the power of the golden share, and that of the potential suspected European challenge to the golden share, which Opposition Members raised in Committee, and we are satisfied that the golden share is compatible with our European treaty obligations.
        My hon. Friend the Member for Cunninghame, South (Mr. Donohoe) asked about the implications of Government shareholding for the future expansion of NATS overseas. I assure him that NATS will engage in future activities abroad as a private company, and that the Government's shareholding will not play a role.
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        The Government will not be involved in any direct contractual relationship with overseas Governments. As I have said, we expect NATS—as a public-private partnership with a solid share structure—to be able to thrive in overseas markets, subject to the laws of the jurisdictions in which they operate.
        Mr. Donohoe: Can the Minister answer a simple question? Why was an amendment tabled in Committee to reduce the Government's shareholding to 25 per cent?
        Mr. Raynsford: As I explained in some detail then, the provision is intended to deal with a dilution of the share capital. That might happen for a number of reasons. It might be considered appropriate to raise additional finance, or it might be considered appropriate to enter into joint ventures with other parties. In such circumstances, it might seem right to dilute the share capital, and to allow the Government's shareholding to fall to, but not below, 25 per cent. That in no way compromises all the powers and safeguards that are in place, to which my right hon. Friend the Deputy Prime Minister referred earlier. The golden share remains, the partnership shareholders retain their role and their power, the shareholders' agreement with the strategic partner remains in force, and all the existing safeguards will continue irrespective of that possibility. It is simply a provision to allow for a possible commercial eventuality, which should not be seen as a cause for concern.
        The hon. Member for Stone described the Bill in terms that reminded me of himself. He spoke of a confused, vague, contradictory and repetitive Bill, and I do not think that he added much to the debate. The hon. Member for Ruislip-Northwood (Mr. Wilkinson) spoke of the hegemonistic aspirations of the European Union. That merely reinforced my fear that the Opposition were being driven by a particular view of Europe that was clouding their judgment.
        These are sensible, practical provisions, which will enable us to look after the interests of national security in a practical, common-sense way. They are far removed from the Opposition's motivation, which is clearly conditioned by their negative view of Europe. We would prefer to be engaged positively with Europe in building a better future for air traffic control systems in this country and throughout Europe.
        Mr. Jenkin: The position can be summarised in this way: the Government are in complete denial about the fact that national security issues are justiciable by the European Court, and that the derogations allowed to member states that wish to act on grounds of national security are very limited.
        Let me ask the Minister, for example, whether the golden share could be invoked on grounds of national security. The opinion from the Commission makes the answer absolutely clear. Article 223 of the relevant treaty—the old treaty, that is; according to the new numbering, it is article 296—allows
        Member states to take measures they consider necessary for the protection of … their security which are connected with the defence sector. However, the Court of Justice pointed out that Article 223 covers only exceptional and clearly defined cases.
        Because of its limited character, this article does not lend itself to a wide interpretation and it is not possible to infer from it that there is inherent in the Treaty a general proviso covering all measures taken for reasons of public security.

        749
        That absolutely lays it down. It is why the Germans lost the Kreil case. [Interruption.] It does not matter whether internal or external security is involved. That provision means that, although the Minister has obviously been advised in good faith that there is an exemption for all invocations of public security, the general blanket exemption does not exist. It is in the treaties. For example, article 36—I am looking at the old treaty again—says:
        The provisions of Articles 28 and 29 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security.
        There is the exemption, but it is prescribed that
        prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.
        Therefore, every invocation of public security that Ministers may make will have to be justified. What is more, it will have to be justified in terms of articles 297 and 298, which can require the European Court of Justice to require the member state to give reasons in camera in court. Therefore, the Ministry of Defence will have to go to the European Court of Justice in secret session to justify why the Government should inflict an obligation on the private company running National Air Traffic Services.
        It is all spelled out. If the Government cannot accept it, we will have to press our amendment to new clause 5 to a vote.
        Question put and agreed to.
        Clause read a Second time.
        Amendment proposed to new clause 5: (a), at end of subsection (4) insert
        'including any duty arising under or by virtue of the European Communities Act 1972 (as amended).'.—[Mr. Jenkin.]
        Question put, That the amendment be made:—
        The House divided: Ayes 136, Noes 405.

        Division No. 187]

        [9.53 pm

        AYES

        Ainsworth, Peter (E Surrey)

        Cormack, Sir Patrick

        Amess, David

        Cran, James

        Arbuthnot, Rt Hon James

        Davies, Quentin (Grantham)

        Atkinson, David (Bour'mth E)

        Davis, Rt Hon David (Haltemprice)

        Baldry, Tony

        Day, Stephen

        Beggs, Roy

        Dorrell, Rt Hon Stephen

        Bercow, John

        Duncan Smith, Iain

        Beresford, Sir Paul

        Emery, Rt Hon Sir Peter

        Blunt, Crispin

        Evans, Nigel

        Body, Sir Richard

        Faber, David

        Boswell, Tim

        Fabricant, Michael

        Bottomley, Peter (Worthing W)

        Fallon, Michael

        Bottomley, Rt Hon Mrs Virginia

        Flight, Howard

        Brady, Graham

        Forth, Rt Hon Eric

        Brazier, Julian

        Fowler, Rt Hon Sir Norman

        Brooke, Rt Hon Peter

        Fox, Dr Liam

        Browning, Mrs Angela

        Fraser, Christopher

        Bruce, Ian (S Dorset)

        Garnier, Edward

        Burns, Simon

        Gibb, Nick

        Butterfill, John

        Gill, Christopher

        Cash, William

        Gillan, Mrs Cheryl

        Chope, Christopher

        Gorman, Mrs Teresa

        Clappison, James

        Gray, James

        Clarke, Rt Hon Kenneth (Rushcliffe)

        Green, Damian

        Greenway, John

        Clifton-Brown, Geoffrey

        Hague, Rt Hon William

        Collins, Tim

        Hamilton, Rt Hon Sir Archie

        750

        Hammond, Philip

        Portillo, Rt Hon Michael

        Hawkins, Nick

        Prior, David

        Hayes, John

        Randall, John

        Heathcoat-Amory, Rt Hon David

        Redwood, Rt Hon John

        Hogg, Rt Hon Douglas

        Robathan, Andrew

        Howard, Rt Hon Michael

        Robertson, Laurence

        Howarth, Gerald (Aldershot)

        Roe, Mrs Marion (Broxbourne)

        Hunter, Andrew

        Ruffley, David

        Jack, Rt Hon Michael

        St Aubyn, Nick

        Jackson, Robert (Wantage)

        Sayeed, Jonathan

        Jenkin, Bernard

        Shephard, Rt Hon Mrs Gillian

        Key, Robert

        Shepherd, Richard

        Kirkbride, Miss Julie

        Simpson, Keith (Mid-Norfolk)

        Lait, Mrs Jacqui

        Soames, Nicholas

        Lansley, Andrew

        Spelman, Mrs Caroline

        Leigh, Edward

        Spicer, Sir Michael

        Letwin, Oliver

        Spring, Richard

        Lewis, Dr Julian (New Forest E)

        Stanley, Rt Hon Sir John

        Lidington, David

        Streeter, Gary

        Lilley, Rt Hon Peter

        Swayne, Desmond

        Lloyd, Rt Hon Sir Peter (Fareham)

        Syms, Robert

        Luff, Peter

        Taylor, Ian (Esher & Walton)

        Lyell, Rt Hon Sir Nicholas

        Taylor, John M (Solihull)

        MacGregor, Rt Hon John

        Taylor, Sir Teddy

        McIntosh, Miss Anne

        Townend, John

        MacKay, Rt Hon Andrew

        Tredinnick, David

        Maclean, Rt Hon David

        Trend, Michael

        McLoughlin, Patrick

        Tyrie, Andrew

        Madel, Sir David

        Viggers, Peter

        Walter, Robert

        Major, Rt Hon John

        Waterson, Nigel

        Malins, Humfrey

        Wells, Bowen

        Maples, John

        Whitney, Sir Raymond

        Mawhinney, Rt Hon Sir Brian

        Whittingdale, John

        May, Mrs Theresa

        Wilkinson, John

        Moss, Malcolm

        Wilshire, David

        Nicholls, Patrick

        Winterton, Mrs Ann (Congleton)

        Norman, Archie

        Winterton, Nicholas (Macclesfield)

        O'Brien, Stephen (Eddisbury)

        Yeo, Tim

        Ottaway, Richard

        Young, Rt Hon Sir George

        Page, Richard

        Paice, James

        Tellers for the Ayes:

        Paterson, Owen

        Mrs. Eleanor Laing and

        Pickles, Eric

        Mr. Peter Atkinson.

        NOES

        Abbott, Ms Diane

        Blackman, Liz

        Adams, Mrs Irene (Paisley N)

        Blears, Ms Hazel

        Ainger, Nick

        Blizzard, Bob

        Ainsworth, Robert (Cov'try NE)

        Blunkett, Rt Hon David

        Alexander, Douglas

        Boateng, Rt Hon Paul

        Allan, Richard

        Borrow, David

        Allen, Graham

        Bradley, Keith (Withington)

        Anderson, Donald (Swansea E)

        Bradley, Peter (The Wrekin)

        Anderson, Janet (Rossendale)

        Bradshaw, Ben

        Armstrong, Rt Hon Ms Hilary

        Brake, Tom

        Ashdown, Rt Hon Paddy

        Brand, Dr Peter

        Ashton, Joe

        Breed, Colin

        Atherton, Ms Candy

        Brown, Rt Hon Gordon (Dunfermline E)

        Atkins, Charlotte

        Baker, Norman

        Brown, Rt Hon Nick (Newcastle E)

        Ballard, Jackie

        Brown, Russell (Dumfries)

        Banks, Tony

        Browne, Desmond

        Barnes, Harry

        Bruce, Malcolm (Gordon)

        Battle, John

        Buck, Ms Karen

        Bayley, Hugh

        Burden, Richard

        Beard, Nigel

        Burgon, Colin

        Beckett, Rt Hon Mrs Margaret

        Burnett, John

        Bell, Stuart (Middlesbrough)

        Burstow, Paul

        Benn, Hilary (Leeds C)

        Butler, Mrs Christine

        Benn, Rt Hon Tony (Chesterfield)

        Byers, Rt Hon Stephen

        Bennett, Andrew F

        Cable, Dr Vincent

        Bermingham, Gerald

        Caborn, Rt Hon Richard

        Berry, Roger

        Campbell, Mrs Anne (C'bridge)

        Best, Harold

        Campbell, Rt Hon Menzies (NE Fife)

        Betts, Clive

        751

        Campbell, Ronnie (Blyth V)

        Flynn, Paul

        Cann, Jamie

        Follett, Barbara

        Caplin, Ivor

        Foster, Rt Hon Derek

        Casale, Roger

        Foster, Don (Bath)

        Caton, Martin

        Foster, Michael Jabez (Hastings)

        Cawsey, Ian

        Foster, Michael J (Worcester)

        Chapman, Ben (Wirral S)

        Foulkes, George

        Chaytor, David

        Fyfe, Maria

        Chidgey, David

        Galbraith, Sam

        Church, Ms Judith

        Gapes, Mike

        Clapham, Michael

        Gardiner, Barry

        Clark, Rt Hon Dr David (S Shields)

        George, Andrew (St Ives)

        Clark, Dr Lynda (Edinburgh Pentlands)

        George, Bruce (Walsall S)

        Gibson, Dr Ian

        Clark, Paul (Gillingham)

        Gidley, Ms Sandra

        Clarke, Charles (Norwich S)

        Gilroy, Mrs Linda

        Clarke, Eric (Midlothian)

        Godman, Dr Norman A

        Clarke, Rt Hon Tom (Coatbridge)

        Godsiff, Roger

        Clarke, Tony (Northampton S)

        Goggins, Paul

        Clelland, David

        Golding, Mrs Llin

        Clwyd, Ann

        Gordon, Mrs Eileen

        Coaker, Vernon

        Gorrie, Donald

        Coffey, Ms Ann

        Griffiths, Jane (Reading E)

        Coleman, Iain

        Griffiths, Nigel (Edinburgh S)

        Colman, Tony

        Griffiths, Win (Bridgend)

        Connarty, Michael

        Grocott, Bruce

        Cook, Rt Hon Robin (Livingston)

        Grogan, John

        Cooper, Yvette

        Gunnell, John

        Corbett, Robin

        Hall, Mike (Weaver Vale)

        Corbyn, Jeremy

        Hall, Patrick (Bedford)

        Corston, Jean

        Hamilton, Fabian (Leeds NE)

        Cotter, Brian

        Hanson, David

        Cousins, Jim

        Harman, Rt Hon Ms Harriet

        Cox, Tom

        Harris, Dr Evan

        Cranston, Ross

        Harvey, Nick

        Crausby, David

        Heal, Mrs Sylvia

        Cryer, Mrs Ann (Keighley)

        Healey, John

        Cryer, John (Hornchurch)

        Heath, David (Somerton & Frome)

        Cummings, John

        Henderson, Doug (Newcastle N)

        Cunningham, Rt Hon Dr Jack (Copeland)

        Henderson, Ivan (Harwich)

        Hepburn, Stephen

        Cunningham, Jim (Cov'try S)

        Heppell, John

        Curtis-Thomas, Mrs Claire

        Hesford, Stephen

        Dalyell, Tam

        Hewitt, Ms Patricia

        Darling, Rt Hon Alistair

        Hill, Keith

        Darvill, Keith

        Hinchliffe, David

        Davey, Edward (Kingston)

        Hodge, Ms Margaret

        Davey, Valerie (Bristol W)

        Hoey, Kate

        Davidson, Ian

        Home Robertson, John

        Davies, Rt Hon Denzil (Llanelli)

        Hood, Jimmy

        Davies, Geraint (Croydon C)

        Hoon, Rt Hon Geoffrey

        Davis, Rt Hon Terry (B'ham Hodge H)

        Hope, Phil

        Hopkins, Kelvin

        Dawson, Hilton

        Howarth, Alan (Newport E)

        Dean, Mrs Janet

        Howarth, George (Knowsley N)

        Denham, John

        Howells, Dr Kim

        Dismore, Andrew

        Hoyle, Lindsay

        Dobbin, Jim

        Hughes, Ms Beverley (Stretford)

        Donohoe, Brian H

        Hughes, Kevin (Doncaster N)

        Doran, Frank

        Hughes, Simon (Southwark N)

        Dowd, Jim

        Humble, Mrs Joan

        Drew, David

        Hurst, Alan

        Dunwoody, Mrs Gwyneth

        Hutton, John

        Eagle, Angela (Wallasey)

        Iddon, Dr Brian

        Eagle, Maria (L 'pool Garston)

        Illsley, Eric

        Edwards, Huw

        Ingram, Rt Hon Adam

        Efford, Clive

        Jackson, Ms Glenda (Hampstead)

        Ellman, Mrs Louise

        Jackson, Helen (Hillsborough)

        Ennis, Jeff

        Jamieson, David

        Ewing, Mrs Margaret

        Jenkins, Brian

        Fearn, Ronnie

        Johnson, Alan (Hull W & Hessle)

        Field, Rt Hon Frank

        Johnson, Miss Melanie (Welwyn Hatfield)

        Fisher, Mark

        Fitzpatrick, Jim

        Jones, Mrs Fiona (Newark)

        Fitzsimons, Mrs Lorna

        Jones, Helen (Warrington N)

        Flint, Caroline

        Jones, Dr Lynne (Selly Oak)

        752

        Jones, Martyn (Clwyd S)

        Murphy, Jim (Eastwood)

        Jones, Nigel (Cheltenham)

        Murphy, Rt Hon Paul (Torfaen)

        Jowell, Rt Hon Ms Tessa

        Naysmith, Dr Doug

        Keeble, Ms Sally

        Norris, Dan

        Keen, Alan (Feltham & Heston)

        Oaten, Mark

        Keen, Ann (Brentford & Isleworth)

        O'Brien, Bill (Normanton)

        Kemp, Fraser

        O'Brien, Mike (N Warks)

        Kennedy, Rt Hon Charles (Ross Skye & Inverness W)

        O'Hara, Eddie

        Olner, Bill

        Kennedy, Jane (Wavertree)

        O'Neill, Martin

        Khabra, Piara S

        Öpik, Lembit

        Kidney, David

        Organ, Mrs Diana

        King, Andy (Rugby & Kenilworth)

        Osborne, Ms Sandra

        King, Ms Oona (Bethnal Green)

        Palmer, Dr Nick

        Kirkwood, Archy

        Pearson, Ian

        Kumar, Dr Ashok

        Pendry, Tom

        Ladyman, Dr Stephen

        Perham, Ms Linda

        Lawrence, Mrs Jackie

        Pickthall, Colin

        Lepper, David

        Pike, Peter L

        Leslie, Christopher

        Plaskitt, James

        Levitt, Tom

        Pollard, Kerry

        Lewis, Ivan (Bury S)

        Pond, Chris

        Lewis, Terry (Worsley)

        Pope, Greg

        Liddell, Rt Hon Mrs Helen

        Pound, Stephen

        Linton, Martin

        Prentice, Ms Bridget (Lewisham E)

        Livsey, Richard

        Prentice, Gordon (Pendle)

        Lloyd, Tony (Manchester C)

        Prescott, Rt Hon John

        Llwyd, Elfyn

        Primarolo, Dawn

        Lock, David

        Prosser, Gwyn

        Love, Andrew

        Purchase, Ken

        McAvoy, Thomas

        Quin, Rt Hon Ms Joyce

        McCabe, Steve

        Quinn, Lawrie

        McCafferty, Ms Chris

        Radice, Rt Hon Giles

        McDonagh, Siobhain

        Raynsford, Nick

        Macdonald, Calum

        Reed, Andrew (Loughborough)

        McDonnell, John

        Reid, Rt Hon Dr John (Hamilton N)

        McFall, John

        Rendel, David

        McGuire, Mrs Anne

        Roche, Mrs Barbara

        McIsaac, Shona

        Rooker, Rt Hon Jeff

        McKenna, Mrs Rosemary

        Rooney, Terry

        Mackinlay, Andrew

        Ross, Ernie (Dundee W)

        Maclennan, Rt Hon Robert

        Rowlands, Ted

        MacShane, Denis

        Roy, Frank

        Mactaggart, Fiona

        Ruane, Chris

        McWalter, Tony

        Ruddock, Joan

        McWilliam, John

        Russell, Bob (Colchester)

        Mahon, Mrs Alice

        Ryan, Ms Joan

        Mallaber, Judy

        Salter, Martin

        Marsden, Gordon (Blackpool S)

        Sanders, Adrian

        Marsden, Paul (Shrewsbury)

        Sarwar, Mohammad

        Marshall, David (Shettleston)

        Sawford, Phil

        Marshall-Andrews, Robert

        Sedgemore, Brian

        Martlew, Eric

        Sheerman, Barry

        Maxton, John

        Shipley, Ms Debra

        Meacher, Rt Hon Michael

        Simpson, Alan (Nottingham S)

        Merron, Gillian

        Singh, Marsha

        Michael, Rt Hon Alun

        Skinner, Dennis

        Michie, Bill (Shef'ld Heeley)

        Smith, Rt Hon Andrew (Oxford E)

        Michie, Mrs Ray (Argyll & Bute)

        Smith, Angela (Basildon)

        Milburn, Rt Hon Alan

        Smith, Rt Hon Chris (Islington S)

        Miller, Andrew

        Smith, Jacqui (Redditch)

        Moffatt, Laura

        Smith, John (Glamorgan)

        Moonie, Dr Lewis

        Smith, Llew (Blaenau Gwent)

        Moore, Michael

        Smith, Sir Robert (W Ab'd'ns)

        Moran, Ms Margaret

        Snape, Peter

        Morgan, Alasdair (Galloway)

        Soley, Clive

        Morgan, Ms Julie (Cardiff N)

        Southworth, Ms Helen

        Morley, Elliot

        Spellar, John

        Morris, Rt Hon Ms Estelle (B'ham Yardley)

        Squire, Ms Rachel

        Starkey, Dr Phyllis

        Morris, Rt Hon Sir John (Aberavon)

        Steinberg, Gerry

        Stevenson, George

        Mountford, Kali

        Stewart, David (Inverness E)

        Mudie, George

        Stewart, Ian (Eccles)

        Mullin, Chris

        Stinchcombe, Paul

        Murphy, Denis (Wansbeck)

        Stoate, Dr Howard

        753

        Strang, Rt Hon Dr Gavin

        Tynan, Bill

        Straw, Rt Hon Jack

        Vaz, Keith

        Stringer, Graham

        Ward, Ms Claire

        Stuart, Ms Gisela

        Wareing, Robert N

        Stunell, Andrew

        Watts, David

        Sutcliffe, Gerry

        Webb, Steve

        Swinney, John

        Welsh, Andrew

        Taylor, Rt Hon Mrs Ann (Dewsbury)

        Whitehead, Dr Alan

        Wicks, Malcolm

        Taylor, Ms Dari (Stockton S)

        Wigley, Rt Hon Dafydd

        Taylor, David (NW Leics)

        Williams, Rt Hon Alan (Swansea W)

        Taylor, Matthew (Truro)

        Temple-Morris, Peter

        Williams, Alan W (E Carmarthen)

        Thomas, Gareth (Clwyd W)

        Williams, Mrs Betty (Conwy)

        Thomas, Gareth R (Harrow W)

        Willis, Phil

        Timms, Stephen

        Wills, Michael

        Tipping, Paddy

        Wilson, Brian

        Todd, Mark

        Winnick, David

        Tonge, Dr Jenny

        Wood, Mike

        Trickett, Jon

        Woolas, Phil

        Truswell, Paul

        Worthington, Tony

        Turner, Dennis (Wolverh'ton SE)

        Wright, Anthony D (Gt Yarmouth)

        Turner, Dr Desmond (Kemptown)

        Wright, Dr Tony (Cannock)

        Turner, Dr George (NW Norfolk)

        Wyatt, Derek

        Turner, Neil (Wigan)

        Twigg, Derek (Halton)

        Tellers for the Noes:

        Twigg, Stephen (Enfield)

        Mr. Tony McNulty and

        Tyler, Paul

        Mr. Don Touhig.

        Question accordingly negatived.
        Clause added to the Bill.
        MR. DEPUTY SPEAKER then proceeded to put forthwith the Questions necessary for the disposal of business to be concluded at that hour.

      New Clause 1

        EXCEPTIONS
        ' —(1) The CAA must not make a final order or make or confirm a provisional order if it is satisfied that—

        (a) the duty imposed on it by section 2 precludes it from doing so, or

        (b) the most appropriate way of proceeding is under the Competition Act 1998.

        (2) If the CAA is satisfied that any of the conditions in subsection (3) applies it must not make a final order or make or confirm a provisional order unless it believes that it is appropriate to do so.
        (3) The conditions are that—

        (a) the licence holder has agreed to take and is taking all the steps the CAA thinks appropriate to secure or facilitate compliance with the duty or condition concerned;

        (b) the contraventions or apprehended contraventions are trivial;

        (c) the contraventions or apprehended contraventions will not adversely affect the interests of the persons referred to in subsection (4);

        (d) the Secretary of State has made an application under section 28 for an air traffic administration order in relation to the licence holder.

        (4) The persons are operators and owners of aircraft, owners and managers of aerodromes, persons travelling in aircraft and persons with rights in property carried in them.
        (5) These interests are the only ones to be considered under subsection (3)(c)—

        (a) interests regarding safety;

        (b) interests regarding the range, availability, continuity, cost and quality of air traffic services.'.—[Mr. Robert Ainsworth.]

        Brought up, read the First and Second time, and added to the Bill.

      New Clause 4

        DIRECTIONS RELATING TO THE ENVIRONMENT
        '—(1) The Secretary of State may give such directions as he thinks are necessary or expedient—

        (a) to prevent or deal with noise, vibration, pollution or other disturbance attributable to aircraft used for the purpose of civil aviation;

        (b) to limit or mitigate the effects of such noise, vibration, pollution or disturbance.

        (2) Directions under this section may be given to—

        (a) a licence holder or licence holders generally;

        (b) a person who is authorised by an exemption to provide air traffic services (an authorised person) or authorised persons generally.

        (3) A direction under this section may be of a general character or may require a licence holder or an authorised person to do or not to do a particular thing.
        (4) A direction under this section may include provision requiring persons to have regard to guidance which relates to the environment and which the Secretary of State may issue from time to time.
        (5) In so far as a direction under this section conflicts with the requirements of section 38 or 81 or of an order under section (Orders for possession of aerodromes, etc.), the direction is to be disregarded.
        (6) In so far as a direction under this section conflicts with the requirements of an enactment or instrument other than section 38 or 81 or an order under section (Orders for possession of aerodromes, etc.), the requirements are to be disregarded.
        (7) Before giving a direction under this section to a particular licence holder or authorised person (as opposed to licence holders or authorised persons generally) requiring him to do or not to do a particular thing, the Secretary of State must consult—

        (a) that licence holder or authorised person;

        (b) the CAA.'.—[Mr. Robert Ainsworth.]

        Brought up, read the First and Second time, and added to the Bill.

      New Clause 11

        CAA's 1973 ACT FUNCTIONS
        '—(1) For the purposes of this section the CAA's 1973 Act functions are the functions mentioned in subsection (2) of section 76 which, by virtue of that section, are functions of the CAA.
        (2) The CAA must exercise its 1973 Act functions in the manner it thinks best calculated—

        (a) to further the interests of operators and owners of aircraft, owners and managers of aerodromes, persons travelling in aircraft and persons with rights in property carried in them;

        (b) to promote efficiency and economy on the part of suppliers of air traffic services;

        (c) to secure that suppliers of air traffic services who are licence holders will not find it unduly difficult to finance activities authorised by their licences;

        (d) to take account of any international obligations of the United Kingdom notified to the CAA by the Secretary of State (whatever the time or purpose of the notification);

        (e) to take account of any guidance on environmental objectives given to the CAA by the Secretary of State after the coming into force of this section;

        (f) to impose on suppliers of air traffic services the minimum restrictions which are consistent with the exercise of the CAA's 1973 Act functions.

        (3) These interests are the only ones to be considered under subsection (2)(a)—

        (a) interests regarding safety;

        (b) interests regarding the range, availability, continuity, cost and quality of air traffic services.

        (4) The reference in subsection (2)(a) to furthering interests includes a reference to furthering them (where the CAA thinks it appropriate) by promoting competition in the provision of air traffic services.
        (5) If in a particular case there is a conflict in the application of the provisions of subsections (2) to (4), in relation to that case the CAA must exercise its 1973 Act functions in the manner it thinks is reasonable having regard to the provisions of subsections (2) to (4) as a whole.
        (6) Section 4 of the Civil Aviation Act 1982 (CAA's general objectives) does not apply in relation to the performance by the CAA of its 1973 Act functions.'.—[Mr. Robert Ainsworth.]
        Brought up, read the First and Second time, and added to the Bill.

    New Clause 12

      CAA's 1998 ACT FUNCTIONS
      '—(1) For the purposes of this section the CAA's 1998 Act functions are the functions mentioned in subsection (3) of section 76 which, by virtue of that section, are functions of the CAA.
      (2) In exercising its 1998 Act functions the CAA may (in particular) have regard to any matter which satisfies the following condition.
      (3) The condition is that the matter is one to which, by virtue of section (CAA 's 1973 Act functions), the CAA must have regard in exercising its 1973 Act functions (within the meaning of that section).'.—[Mr. Robert Ainsworth.]
      Brought up, read the First and Second time, and added to the Bill.

    New Clause 20

      COMMISSION'S POWER TO GIVE direction
      '—(1) This section applies if the Competition Commission is given notice under section 13.
      (2) Within the permitted period the Commission may give a direction to the CAA—

      (a) not to make the modifications set out in the notice, or

      (b) not to make such of those modifications as are specified in the direction.

      (3) But the Commission may give a direction only if it thinks the modifications concerned are not appropriate to remedy or prevent the adverse effects specified in the Commission's report on the reference under section 11.
      (4) If the Commission gives a direction it must—

      (a) publish a notice in such manner as the Commission thinks appropriate for bringing the matters to which it relates to the attention of persons likely to be affected by the direction, and

      (b) serve a copy of the notice on the licence holder.

      (5) The notice must set out—

      (a) the modifications set out in the notice given under section 13,

      (b) the direction, and

      (c) the reasons for giving the direction.

      (6) If the permitted period expires without a direction being given under subsection (2) the CAA must make the modifications set out in the notice given under section 13.
      (7) If within the permitted period a direction is given under subsection (2)(b) the CAA must make the modifications which are—

      (a) set out in the notice given under section 13, and

      (b) not specified in the direction.

      (8) As soon as practicable after making modifications under this section the CAA must send a copy of them to the licence holder and a copy to the Secretary of State.
      (9) The permitted period is the period of four weeks starting with the day the Commission is given notice under section 13.
      (10) But if within that period—

      (a) the Commission applies to the Secretary of State to extend it to six weeks, and

      (b) he directs that it is to be so extended,

      the permitted period is the period of six weeks starting with the day the Commission is given notice under section 13.'.—[Mr. Robert Ainsworth.]
      Brought up, read the First and Second time, and added to the Bill.

    New Clause 21

      POSITION WHERE COMMISSION GIVES direction
      '—(1) This section applies if the Competition Commission gives a direction under section (Commission's power to give direction)(2).
      (2) If the direction is given under section (Commission's power to give direction)(2)(a) the Commission may itself make such modifications of the conditions of the licence as it thinks are needed to remedy or prevent the adverse effects specified in the Commission's report on the reference under section 11.
      (3) If the direction is given under section (Commission's power to give direction)(2)(b) the Commission may itself make such modifications of the conditions of the licence as it thinks are needed to remedy or prevent such of the adverse effects as—

      (a) are specified in the Commission's report on the reference under section 11, and

      (b) would not be remedied or prevented by the modifications set out in the notice under section 13 and not specified under section (Commission's power to give direction)(2)(b).

      (4) Before making modifications under this section the Commission must—

      (a) publish a notice in such manner as the Commission thinks appropriate for bringing the matters to which it relates to the attention of persons likely to be affected by the making of the modifications,

      (b) serve a copy of the notice on the licence holder and a copy on the CAA, and

      (c) consider any representations made in accordance with the notice (and not withdrawn).

      (5) The notice must—

      (a) state that the Commission proposes to make the modifications and state their effect and the reasons for so proposing, and

      (b) state the period (not less than 28 days starting with the date of publication of the notice) within which representations may be made regarding the proposed modifications.

      (6) As soon as practicable after making modifications under this section the Commission must send a copy of them to the licence holder, a copy to the Secretary of State and a copy to the CAA.'.—[Mr. Robert Ainsworth.]
      Brought up, read the First and Second time, and added to the Bill.

    New Clause 22

      DIRECTIONS: FURTHER PROVISION
      '—(1) Directions under section 64(1) may include provision as to the manner in which the CAA is to exercise its air navigation functions.
      (2) The provision may include—

      (a) provision requiring consultation with specified persons or specified descriptions of persons in relation to specified matters;

      (b) provision requiring the CAA to seek the approval of the Secretary of State in relation to specified matters;

      (c) provision requiring the CAA in specified circumstances to refer specified matters to the Secretary of State.

      (3) If a matter is referred to the Secretary of State by virtue of subsection (2)(b) or (c), he may give such directions to the CAA as he thinks fit.'.—[Mr. Robert Ainsworth.]
      Brought up, read the First and Second time, and added to the Bill.

    New Clause 23

      INFORMATION FOR PURPOSES OF CHAPTER III
      '—(1) The CAA may, for any purpose connected with its air navigation functions, serve on a person who provides air traffic services a notice which—

      (a) requires the person to produce any documents which are specified or described in the notice and are in his custody or under his control, and to produce them at a time and place so specified and to a person so specified, or

      (b) requires the person to supply information specified or described in the notice, and to supply it at a time and place and in a form and manner so specified and to a person so specified.

      (2) A requirement may be made under subsection (1)(b) only if the person is carrying on a business.
      (3) No person may be required under this section—

      (a) to produce documents which he could not be compelled to produce in civil proceedings in the court;

      (b) to supply information which he could not be compelled to supply in such proceedings.

      (4) If a person without reasonable excuse fails to do anything required of him by a notice under subsection (1) he is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.
      (5) If a person intentionally alters, suppresses or destroys a document which he has been required to produce by a notice under subsection (1) he is guilty of an offence and liable—

      (a) on summary conviction, to a fine not exceeding the statutory maximum;

      (b) on conviction on indictment, to a fine.

      (6) If a person makes default in complying with a notice under subsection (1) the court may on the CAA's application make such order as the court thinks fit for requiring the default to be made good.
      (7) An order under subsection (6) may provide that all the costs or expenses of and incidental to the application are to be borne—

      (a) by the person in default, or

      (b) if officers of a company or other association are responsible for its default, by those officers.

      (8) A reference to producing a document includes a reference to producing a legible and intelligible copy of information recorded otherwise than in legible form.
      (9) A reference to suppressing a document includes a reference to destroying the means of reproducing information recorded otherwise than in legible form.
      (10) A reference to the court is to—

      (a) the High Court in relation to England and Wales or Northern Ireland;

      (b) the Court of Session in relation to Scotland.'.—[Mr. Robert Ainsworth.]

      Brought up, read the First and Second time, and added to the Bill.

    New Clause 24

      GENERAL DUTY
      '—(1) The CAA must exercise its air navigation functions in the manner it thinks best calculated—

      (a) to secure the most efficient use of airspace consistent with the safe operation of aircraft and the expeditious flow of air traffic;

      (b) to satisfy the requirements of operators and owners of all classes of aircraft;

      (c) to take account of the interests of any person (other than an operator or owner of an aircraft) in relation to the use of any particular airspace or the use of airspace generally;

      (d) to take account of any guidance on environmental objectives given to the CAA by the Secretary of State after the coming into force of this section;

      (e) to facilitate the integrated operation of air traffic services provided by or on behalf of the armed forces of the Crown and other air traffic services;

      (f) to take account of the interests of national security;

      (g) to take account of any international obligations of the United Kingdom notified to the CAA by the Secretary of State (whatever the time or purpose of the notification);

      (h) to impose on providers of air traffic services the minimum restrictions which are consistent with the requirements of the above paragraphs.

      (2) If in a particular case there is a conflict in the application of the provisions of subsection (1), in relation to that case the CAA must exercise its air navigation functions in the manner it thinks is reasonable having regard to the provisions of subsection (1) as a whole.
      (3) Section 4 of the Civil Aviation Act 1982 (CAA's general objectives) does not apply in relation to the performance by the CAA of its air navigation functions.'.—[Mr. Robert Ainsworth.]
      Brought up, read the First and Second time, and added to the Bill.

    New Clause 25

      INTERPRETATION
      '—(1) This section applies for the purposes of this Chapter.
      (2) The CAA's air navigation functions are the functions which the CAA is to perform in pursuance of directions under section 64(1).
      (3) These are managed areas—

      (a) the United Kingdom;

      (b) any area which is outside the United Kingdom but in respect of which the United Kingdom has undertaken under international arrangements to provide air traffic services.'.—[Mr. Robert Ainsworth.]

      Brought up, read the First and Second time, and added to the Bill.

    Clause 1

      SECRETARY OF STATE'S GENERAL DUTY
      Amendments made: No. 12, in page 1, line 24, after "the" insert "range,".
      No. 13, in page 1, line 25, at end insert—
      '(2A) The reference in subsection (1)(a) to furthering interests includes a reference to furthering them (where the Secretary of State thinks it appropriate) by promoting competition in the provision of air traffic services.'.
      No. 14, in page 1, line 27, leave out "and (2)" and insert "to (2A)".
      No. 15, in page 2, line 1, leave out "and (2)" and insert "to (2A)".—[Mr. Robert Ainsworth.]

    Clause 2

      CAA's GENERAL DUTY
      Amendments made: No. 16, in page 2, line 25, after "the" insert "range,".
      No. 17, in page 2, line 26, at end insert—
      '(2A) The reference in subsection (1)(a) to furthering interests includes a reference to furthering them (where the CAA thinks it appropriate) by promoting competition in the provision of air traffic services.'.
      No. 18, in page 2, line 28, leave out "and (2)" and insert "to (2A)".
      No. 19, in page 2, line 30, leave out "and (2)" and insert "to (2A)".—[Mr. Robert Ainsworth.]

    Clause 3

      RESTRICTIONS ON PROVIDING SERVICES
      Amendment made: No. 374, in page 3, line 5, at end insert—
      '( ) Subsection (1) does not apply if the services are provided by the CAA in pursuance of directions under section 64(1).'.—[Mr. Robert Ainsworth.]

    Clause 6

      LICENCES: GRANT
      Amendments made: No. 73, in page 4, line 29, after "granting" insert "or refusing".
      No. 74, in page 4, line 32, leave out ", and" and insert "or refusal,
      (aa) serve a copy of the notice on the applicant, and'.
      No. 75, in page 4, line 36, leave out—
      'that the licence authority proposes to grant the licence and'
      and insert—
      'either that the licence authority proposes to grant the licence that it proposes to refuse it and (in either case)'.
      No. 76, in page 4, line 40, leave out "licence" and insert "grant or refusal".
      No. 77, in page 5, line 2, leave out—
      'to applications and grants relating'
      and insert "in relation".—[Mr. Robert Ainsworth.]

    Clause 8

      DUTIES OF LICENCE HOLDERS
      Amendment made: No. 373, in page 6, line 5, at end insert—
      (4) For the purposes of subsection (1)(a) a system for the provision of services is safe if (and only if) in providing the services the person who provides them complies with such requirements as are imposed by Air Navigation Orders with regard to their provision.
      (5) An Air Navigation Order is an Order in Council under section 60 of the Civil Aviation Act 1982.'.—[Mr. Robert Ainsworth.]

    Clause 9
      BREACH OF DUTIES OR CONDITIONS
      Amendment made: No. 30, in page 6, line 13, leave out "15 or".—[Mr. Robert Ainsworth.]
    Clause 11

      REFERENCES TO COMPETITION COMMISSION
      Amendment made: No. 29, in page 6, line 41, leave out—
      under the authority of a licence'
      and insert—
      'by or on behalf of a licence holder'.
      No. 20, in page 7, line 45, after "under" insert—
      'Parts IV, V, VI and VIII of'.
      No. 21, in page 8, line 5, leave out "and 85" and insert", 85 and 93B".
      No. 22, in page 8, line 5, leave out second "and".
      No. 23, in page 8, line 6, at end insert—
      '; and false or misleading information);'.—[Mr. Robert Ainsworth.]

    Clause 13

      MODIFICATION FOLLOWING REPORT
      Amendment made: No. 336, in page 9, line 11, leave out "make" and insert "suggest".
      No. 337, in page 9, line 14, leave out "making" and insert "suggesting".
      No. 338, in page 9, line 23, leave out "make" and insert "suggest".
      No. 339, in page 9, line 27, leave out "proposed modifications" and insert "proposals".
      No. 340, in page 9, line 28, leave out subsection (5) and insert—
      '(5) If the CAA suggests modifications under this section it—

      (a) give notice to the Commission setting out the modifications it suggests and the reasons for its suggestions, and

      (b) send to the Commission copies of any representations made in accordance with the notice published under subsection (3) (and not withdrawn).'.—[Mr. Robert Ainsworth.]

    Clause 14

      MODIFICATION BY ORDER UNDER OTHER ENACTMENTS
      Amendment made: No. 24, in page 9, line 39, leave out—
      'whose provision is authorised by a licence'.
      No. 25, in page 9, line 44, leave out—
      'under the authority of a licence'.
      No. 26, in page 10, leave out line 4.—[Mr. Robert Ainsworth.]

    Clause 15
      ORDERS FOR SECURING COMPLIANCE
      Amendment made: No. 31, in page 10, line 16, leave out Clause 15.—[Mr. Robert Ainsworth.]
    Clause 16
      PROCEDURAL REQUIREMENTS
      Amendment made: No. 32, in page 11, line 24, leave out Clause 16.—[Mr. Robert Ainsworth.]
    Clause 17
      VALIDITY OF ORDERS
      Amendment made: No. 33, in page 12, line 41, leave out Clause 17.—[Mr. Robert Ainsworth.]
    Clause 18
      EFFECT OF ORDERS
      Amendment made: No. 34, in page 13, line 18, leave out Clause 18.—[Mr. Robert Ainsworth.]
    Clause 19
      POWER TO OBTAIN INFORMATION
      Amendment made: No. 35, in page 13, line 34, leave out Clause 19.—[Mr. Robert Ainsworth.]
    Clause 20
      ENFORCEMENT BY CAA
      Amendment made: No. 36, in page 14, line 37, leave out Clause 20.—[Mr. Robert Ainsworth.]
    Clause 21

      ORDERS FOR SECURING COMPLIANCE
      Amendment made: No. 37, in page 15, line 3, after first "a" insert—
      'section 8 duty or a'.
      No. 38, in page 15, line 4, after "provision" insert "it thinks is".
      No. 39, in page 15, line 4, after "the" insert "duty or".
      No. 40, in page 15, line 6, after first "a" insert—
      'section 8 duty or a'.
      No. 41, in page 15, line 8, after "the" insert "duty or".
      No. 42, in page 15, line 13, after "the" insert "section 8 duty or".
      No. 43, in page 15, line 14, after second "a" insert "section 8 duty or".
      No. 44, in page 15, line 16, leave out "negligence" and insert—
      'an act or omission which takes place in the course of the provision of air traffic services'.
      No. 45, in page 15, line 37, after "a" insert—
      'section 8 duty or a'.
      No. 46, in page 15, line 39, after "the" insert "duty or".
      No. 47, in page 15, line 40, leave out from beginning to end of line 4 on page 16.
      No. 48, in page 16, line 5, after "holder" insert "—

      (a) a section 8 duty is a duty imposed on the holder by section 8:

      (b)".

      No. 49, in page 16, line 7, leave out "22" and insert—
      '(Exceptions)'.
      No. 50, in page 16, line 7, after second "to" insert—
      'a section 8 duty or to'.
      No. 51, in page 16, line 8, at end insert—
      '(13) This section has effect subject to section (Exceptions)'.—[Mr. Robert Ainsworth.]

    Clause 22

      PROCEDURAL REQUIREMENTS
      Amendment made: No. 52, in page 16, line 21, after first "the" insert "section 8 duty or".
      No. 53, in page 16, line 23, after "the" insert "duty or".
      No. 54, in page 16, line 40, at end insert—
      '(4A) But if the modifications are trivial the CAA must be treated as complying with subsection (4) if it serves on the licence holder a notice of the proposal to make or confirm the order with modifications.'.
      No. 55, in page 16, line 43, after "holder" insert—
      'and a copy on the Secretary of State'.
      No. 56, in page 17, line 20, leave out "21(10)" and insert—
      '(Exceptions) (1)'.
      No. 57, in page 17, line 21, after "serve" insert "a".
      No. 58, in page 17, line 24, at end insert—
      '(10) If the CAA is satisfied as mentioned in section (Exceptions)(2) and it does not believe it is appropriate to make a final order or make or confirm a provisional order, it must—

      (a) serve a notice to that effect on the licence holder, and

      (b) publish the notice in such manner as it thinks appropriate for bringing the matters to which the notice relates to the attention of persons likely to be affected by them.'.—[Mr. Robert Ainsworth.]

    Clause 23

      VALIDITY OF ORDERS
      Amendment made: No. 59, in page 17, line 29, leave out "section 21" and insert—
      'sections 21 and (Exceptions)'.
      No. 60, in page 17, line 39, leave out "section 21" and insert—
      'sections 21 and (Exceptions)'.—[Mr. Robert Ainsworth.]

    Clause 25

      POWER TO OBTAIN INFORMATION
      Amendment made: No. 61, in page 18, line 18, at end insert—
      'section 8 duty or a'.
      No. 62, in page 18, line 21, leave out "section 21" and insert—
      'sections 21 and (Exceptions)'.—[Mr. Robert Ainsworth.]

    Clause 27

      DUTY TO MAKE ORDER
      Amendment made: No. 1, in page 20, line 1, at end insert—
      'or appoint a provisional liquidator.'.
      No. 2, in page 20, line 4, at end insert—
      '(4A) The Secretary of State and the CAA may propose a person to manage the company's affairs, business and property while an air traffic administration order is in force; and if they do the court must appoint that person.'.—[Mr. Robert Ainsworth.]

    Clause 28

      POWER TO MAKE ORDER
      Amendments made: No. 63, in page 20, line 11, leave out "five" and insert "four".
      No. 64, in page 20, line 25, leave out "16(9)" and insert " 22(9) or (10)".
      No. 65, in page 20, line 32, at end insert "or a licence condition".
      No. 66, in page 20, line 33, leave out "17" and insert "23".
      No. 67, in page 20, line 37, leave out from beginning to end of line 43.
      No. 68, in page 21, line 1, after "duty" insert—
      'or to a licence condition'.
      No. 69, in page 21, line 2, leave out "15" and insert— "21".
      No. 70, in page 21, line 3, leave out from beginning to end of line 4.—[Mr. Robert Ainsworth.]

    Clause 30

      PETITIONS AND ORDERS: SUPPLEMENTARY
      Amendment made: No. 368, in page 21, line 40, at end insert—
      '(ba) in subsection (1)(c) after "its property" there were inserted ", and no right of re-entry or forfeiture may be enforced against the company in respect of any land,";'.—[Mr. Robert Ainsworth.]

    Clause 35

      REGISTER
      Amendments made: No. 71, in page 23, line 30, leave out from beginning to end of line 32.
      No. 72, in page 23, line 35, at end insert "or (10)".—[Mr. Robert Ainsworth.]

    Clause 38

      DIRECTIONS IN INTERESTS OF NATIONAL SECURITY ETC.
      Amendment made: No. 125, in page 24, line 34, after "81" insert—
      'or of an order under section (Orders for possession of aerodromes, etc.)'.
      No. 126, in page 24, line 36, after "81" insert—
      'or an order under section (Orders for possession of aerodromes, etc.)'.—[Mr. Robert Ainsworth.]

    Clause 39

      INTERPRETATION
      Amendment made: No. 78, in page 25, line 30, at end insert—
      '(h) modification.'.
      No. 79, in page 25, line 44, at end insert—
      '(7) "Modification" includes addition, alteration and omission, and cognate expressions are to be construed accordingly.'.—[Mr. Robert Ainsworth.]

    clause 40

      MEANING OF TRANSFER SCHEMES
      Amendment made: No. 89, in page 26, line 5, leave out from "which" to end of line 8 and insert—
      'contains provisions falling within one or more of subsections (2) to (3E).'.
      No. 90, in page 26, line 22, at end insert—

      '(ba) a company which is wholly owned by the Crown;

      (bb) a company which is wholly owned by the CAA;'.

      No. 91, in page 26, line 23, leave out from "of' to end of line 24 and insert—
      'a company falling within paragraph (ba) or (bb).'.
      No. 92, in page 26, line 24, at end insert—
      '(3A) Provisions falling within this subsection are ones for the transfer of any of the property, rights or liabilities of a company (the transferor) which is a wholly owned subsidiary of a company wholly owned by the CAA, or of all or part of the transferor's undertaking, to any of the following—

      (a) the CAA;

      (b) a company which is wholly owned by the Crown;

      (c) a company which is wholly owned by the CAA;

      (d) a company which is a wholly owned subsidiary of a company falling within paragraph (b) or (c).

      (3B) Provisions falling within this subsection are ones for the transfer of any of the property, rights or liabilities of a company (the transferor) which is wholly owned by the Crown but which was wholly owned by the CAA on the coming into force of this section, or of all or part of the transferor's undertaking, to any of the following—

      (a) a company which is wholly owned by the Crown;

      (b) a company which is a wholly owned subsidiary of the transferor.

      (3C) Provisions falling within this subsection are ones for the transfer of any of the property, rights or liabilities of a company (the transferor) which is wholly owned by the Crown, or of all or part of the transferor's undertaking, to the CAA.
      (3D) Provisions falling within this subsection are ones for the transfer of any of the property, rights or liabilities of a company (the transferor) in circumstances where the transferor is a wholly owned subsidiary of a company (the holding company) wholly owned by

      765
      the Crown and the holding company was wholly owned by the CAA on the coming into force of this section, or of all or part of the transferor's undertaking, to any of the following—

      (a) a company which is wholly owned by the Crown;

      (b) a company which is a wholly owned subsidiary of a company falling within paragraph (a).

      (3E) Provisions falling within this subsection are ones for the transfer of any of the property, rights or liabilities of a company (the transferor) which is a wholly owned subsidiary of a company wholly owned by the Crown, or of all or part of the transferor's undertaking, to the CAA.'.
      No. 93, in page 26, line 29, after "a" insert "transfer.—[Mr. Robert Ainsworth.]
      Ordered,
      That clause No. 40, as amended, be divided into two Clauses, the first consisting of subsections (1) to (4)—[Meaning of transfer scheme] and the second of subsections (5) to (9) [Transfer schemes: supplementary].—[Mr. Robert Ainsworth.]

    Clause 42

      EFFECT OF SCHEME MADE BY CAA
      Amendment made: No. 10, in page 28, line 3, at end insert—
      '(8) In this section "modify" includes add to, omit from and otherwise alter.'.—[Mr. Robert Ainsworth.]

    Clause 45

      ACCOUNTING PROVISIONS
      Amendments made: No. 94, in page 29, line 25, leave out from "scheme" to end of line 34 and insert—

      (a) from the CAA to a company,

      (b) from a company to the CAA, or

      (c) from a company to a company.'.

      No. 96, in page 30, line 7, at end insert—
      '(5A) If no value or amount appeared as mentioned in subsection (4) in the case of an asset or liability, the value or amount which may be stated by virtue of subsection (3) is the value or amount which the maker of the transfer scheme considers appropriate.'.
      No. 97, in page 30, line 8, leave out—
      'from time to time in any reserves'
      and insert "in the opening accounts".
      No. 98, in page 30, line 14, leave out "from time to time".
      No. 99, in page 30, line 15, leave out "and any subsequent accounts".—[Mr. Robert Ainsworth.]

    Clause 46

      ACCOUNTING PROVISIONS: INTERPRETATION
      Amendment made: No. 95, in page 30, line 35, leave out—
      'wholly owned by the CAA'.—[Mr. Robert Ainsworth.]

    Clause 47

      ISSUE OF SECURITIES
      Amendments made: No. 86, in page 31, line 4, after "is" insert—
      'a company falling within subsection (2B).
      (2) The Secretary of State may give a direction under this section to the transferee if when the direction is given it is a company falling within subsection (2B).
      (2A) A direction under this section is one requiring the transferee—

      (a) to issue to the appropriate person such securities of the transferee as are specified in the direction,

      (b) to do so at a time or times (specified in the direction) when it is a company falling within subsection (2B), and

      (c) to do so on such terms as are specified in the direction.

      (2B) A company falls within this subsection if it is'.
      No. 81, in page 31, line 9, leave out subsection (2).
      No. 82, in page 31, line 21, leave out subsection (4).—[Mr. Robert Ainsworth.]

    Clause 48

      GOVERNMENT INVESTMENT IN SECURITIES
      Amendments made: No. 27, in page 31, line 39, leave out from "may" to end of line 41 and insert—

      (a) acquire securities of the transferee by subscription or purchase;

      (b) acquire options to acquire or dispose of securities of the transferee.'.

      No. 28, in page 31, line 42, leave out "rights" and insert "options".—[Mr. Robert Ainsworth.]

    Clause 49

      CROWN SHAREHOLDING
      Amendments made: No. 454, in page 32, line 9, at end insert—
      '(2A) The Secretary of State must ensure that the Crown does not dispose of any of the shares it holds in the designated company unless he is satisfied that a scheme is in place to ensure the completion of any project which—

      (a) concerns the development of major facilities connected with air traffic services, and

      (b) was commissioned before the coming into force of this section by the CAA or a company wholly owned by the CAA.'.

      No. 455, in page 32, line 33, after "subsection", insert "(2A),".
      No. 456, in page 32, line 35, after "subsection", insert "(2A),".—[Mr. Robert Ainsworth.]

    Clause 51

      GUARANTEES
      Amendment made: No. 100, in page 33, line 40, leave out subsection (4) and insert—
      '(4) In the case of a financial obligation incurred before the giving of a guarantee, it is immaterial when the obligation was incurred.'.—[Mr. Robert Ainsworth.]

      Clause 54

        SHADOW DIRECTORS
        Amendments made: No. 101, in page 35, line 30, leave out from "company" to "and" in line 31 and insert "falling within subsection (1A),".
        No. 102, in page 35, line 33, at end insert—
        '(1A) A company falls within this subsection if it is—

        (a) a company which is wholly owned by the Crown,

        767

        (b) a company which is wholly owned by the CAA, or

        (b) a company which is a wholly owned subsidiary of a company falling within paragraph (a) or (b).'.

        No. 103, in page 35, line 35, after "be" insert—
        ', or becomes and continues to be,'.—[Mr. Robert Ainsworth.]

      Clause 56
        SECURITIES TO BE ISSUED
        Amendment made: No. 83, in page 38, line 7, leave out "or allotted".—[Mr. Robert Ainsworth.]
      Clause 57

        SECURITIES: OTHER PROVISIONS
        Amendments made: No. 84, in page 38, line 16, after "section" insert "47 or".
        No. 85, in page 38, line 24, after "section" insert "47 or".—[Mr. Robert Ainsworth.]

      Clause 64

        AIR NAVIGATION: DIRECTIONS
        Amendments made: No. 375, in page 41, leave out line 43 and insert "a managed area.".
        No. 376, in page 42, line 1, leave out subsection (2).
        No. 377, in page 42, line 3, at end insert—
        '(2A) No action is to lie in respect of a failure by the CAA
        to perform a duty imposed on it by a direction under subsection (1); but that does not affect a right of action in respect of an act or omission which takes place in the course of performing the CAA's air navigation functions.'.
        No. 378, in page 42, line 32, leave out subsection (8).—[Mr. Robert Ainsworth.]

      Clause 65

        DIRECTIONS: SUPPLEMENTARY
        Amendments made: No. 379, in page 42, line 35, after "(6)" insert—
        'or section (Directions: further provision)(3)'.
        No. 127, in page 42, line 36, after "81" insert—
        'or of an order under section (Orders for possession of aerodromes, etc.)'.
        No. 380, in page 42, line 37, after "(6)" insert—
        'or section (Directions: further provision)(3)'.
        No. 128, in page 42, line 38, after "81" insert—
        'or an order under section (Orders for possession of aerodromes, etc.)'.
        No. 381, in page 43, line 1, after "64(6)" insert—
        'or section (Directions: further provision)(3)'—[Mr. Robert Ainsworth.]

      Clause 66

        CHARGES FOR SERVICES
        Amendments made: No. 341, in page 43, line 12, after first "of' insert—
        ', or methods of calculating, the'.
        No. 342, in page 43, line 15, after "aircraft" insert—
        '(or descriptions of such operators and owners)'.
        No. 343, in page 43, line 16, after "persons" insert "(or descriptions of persons)".
        No. 344, in page 43, line 18, leave out "When it makes" and insert "On or after making".
        No. 345, in page 43, line 18, leave out "also".
        No. 346, in page 43, line 29, after "amounts" insert—
        ', or calculated in accordance with the specified methods,'.
        No. 347, in page 43, line 42, at end insert—
        '(10) The CAA must exercise its powers under this section in the manner it thinks best calculated to take account of international agreements to which the United Kingdom is a party.'.—[Mr. Robert Ainsworth.]

      Clause 67

        PUBLICATION, COMMENCEMENT, AMENDMENT AND REVOCATION
        Amendments made: No. 348, in page 44, line 1, leave out "(or specifications and stipulations)" and insert "or stipulations".
        No. 349, in page 44, line 10, leave out from beginning to "does" in line 11 and insert "An amendment or revocation".—[Mr. Robert Ainsworth.]

      Clause 68

        SPECIFICATIONS: SUPPLEMENTARY
        Amendments made: No. 350, in page 44, line 20, after "amounts" insert "or methods".
        No. 351, in page 44, line 21, after "amounts" insert "or methods".
        No. 352, in page 44, line 23, after "amounts" insert "or methods".
        No. 353, in page 44, line 25, after "amounts" insert "or methods".
        No. 354, in page 44, line 35, at end insert—
        '( ) Methods may be expressed by reference to such factors (including exchange rates between currencies) as the CAA thinks fit.
        ( ) A description of services may be expressed by reference to such factors (including the area in respect of which they are provided) as the CAA thinks fit.
        ( ) A description of operators and owners may be so general as to refer to all operators and owners.'.
        No. 355, in page 44, line 36, leave out from beginning to second "are" in line 37 and insert—
        'Owners and operators may be specified (or of a description specified) if the services concerned are available for the aircraft concerned, and it is immaterial whether or not the services'.—[Mr. Robert Ainsworth.]

      Clause 70

        CHARGEABLE AIR TRAFFIC SERVICES
        Amendments made: No. 356, in page 45, line 16, after "are" insert "air traffic services which—

        (a) fall within subsection (1A), and

        (b) are not excepted air traffic services (as defined in subsection (1B)).

        (1A) These air traffic services fall within this subsection-'.
        No. 357, in page 45, line 27, at end insert—
        '(1B) These are excepted air traffic services—

        (a) air traffic services provided by the owner or manager of an aerodrome or by his employee;

        769

        (b) air traffic services provided on behalf of the owner or manager of an aerodrome (other than a designated aerodrome) in circumstances where the person providing the services is not an employee of the owner or manager and they are provided under a contract or other arrangement made by the owner or manager and the person providing them.

        (1C) A designated aerodrome is an aerodrome designated by the Secretary of State by order for the purposes of subsection (1B)(b).'.—[Mr. Robert Ainsworth.]

      Clause 71

        RECORDS
        Amendments made: No. 358, in page 45, line 38, leave out "officers" and insert "persons".
        No. 359, in page 45, line 41, leave out "officers" and insert "persons".
        No. 360, in page 46, line 1, leave out "officers" and insert "persons".
        No. 361, in page 46, line 14, leave out subsection (6).
        No. 362, in page 46, line 27, at end insert—
        '( ) In subsection (4)—

        (a) a reference to officers of the CAA includes a reference to persons authorised to act as such officers;

        (b) a reference to officers of Eurocontrol includes a reference to persons authorised to act as such officers.'.—[Mr. Robert Ainsworth.]

      Clause 73

        DETENTION AND SALE
        Amendments made: No. 363, in page 47, line 21, leave out—
        'of which he is the operator when detention begins'
        and insert "falling within subsection (1A)".
        No. 364, in page 47, line 29, at end insert—
        '(1A) These aircraft fall within this subsection—

        (a) the aircraft in respect of which the charge was incurred (whether or not the person who is the operator of the aircraft when detention begins is the defaulter);

        (b) any aircraft of which the defaulter is the operator when detention begins.'.—[Mr. Robert Ainsworth.]

      Clause 74

        INTERPRETATION
        Amendments made: No. 365, in page 48, line 4, leave out—
        'For the purposes of this Chapter'
        and insert—
        '(1) This section applies for the purposes of this Chapter.
        (2)'.
        No. 366, in page 48, line 5, at end insert—
        '(3) An aerodrome is an aerodrome as defined in section 105(1) of the Civil Aviation Act 1982; and a manager of an aerodrome is a person who is in charge of it or holds a licence granted in respect of it by virtue of section 60 of that Act (Chicago Convention, regulation of air navigation etc).'.—[Mr. Robert Ainsworth.]

      Clause 75

        INTERPRETATION
        Amendment made: No. 287, in page 48, line 11, at end insert—
        '(1A) For the purposes of this Chapter these expressions have the meanings given by section 39—

        (a) aerodrome;

        (b) licence;

        (c) licence holder.'.—[Mr. Robert Ainsworth.]

      Clause 81

        CONTROL IN TIME OF HOSTILITIES ETC.
        Amendments made: No. 134, in page 51, line 2, leave out "business" and insert "undertaking".
        No. 129, in page 51, leave out lines 27 and 28 and insert—
        '(5) In so far as a direction under this section conflicts with the requirements of an order under section (Orders for possession of aerodromes, etc.), the direction is to be disregarded.
        (5A) In so far as a direction under this section conflicts—

        (a) with the requirements of an enactment or instrument other than an order under section (Orders for possession of aerodromes, etc.), or

        (b) with any duty which arises otherwise than under an enactment or instrument,
        the requirements are or the duty is to be disregarded.'.

        No. 135, in page 51, leave out lines 36 to 41.—
        [Mr. Robert Ainsworth.]

      Clause 82

        SECTION 81: INTERPRETATION
        Amendments made: No. 136, in page 52, line 11, leave out "section 81" and insert—
        'sections 81 and (Orders for possession of aerodromes, etc.)'.
        No. 137, in page 52, line 16, leave out "business" and insert "undertaking".
        No. 138, in page 52, line 26, leave out "business is a business" and insert "undertaking is an undertaking".—[Mr. Robert Ainsworth.]

      Clause 89

        ORDERS AND REGULATIONS
        Amendments made: No. 87, in page 54, line 36, leave out "Secretary of State" and insert "person exercising the power".
        No. 139, in page 54, line 38, leave out from "instrument" to end of line 39.
        No. 88, in page 54, line 39, at end insert—
        '(3A) In subsections (1) and (3) references to a power to make an order are to a power of the Secretary of State; and in subsection (2) the reference to an order is to an order made by the Secretary of State.'.
        No. 140, in page 54, line 39, at end insert—
        '( ) A statutory instrument is subject to annulment in pursuance of a resolution of either House of Parliament if the instrument contains an order or regulations made by the Secretary of State under any provision of this Part other than section 49 or (Orders for possession of aerodromes, etc.).'.
        No. 141, in page 54, line 40, leave out from beginning to "unless" in line 41 and insert—
        'No order is to be made under section 49'.
        No. 367, in page 55, line 10, leave out "70" and insert "70(2)".
        No. 104, in page 55, line 11, at end insert—
        '(10) If apart from this subsection a draft of an order under section 49 would be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not such an instrument.'.—[Mr. Robert Ainsworth.]

      Clause 91

        EXTENSION OUTSIDE UNITED KINGDOM
        Amendments made: No. 142, in page 55, leave out lines 27 to 37.
        No. 11, in page 55, line 41, at end insert—
        '(6) In this section "modifications" includes additions, omissions and other alterations.'.—[Mr. Robert Ainsworth.]

      Schedule 1

        AIR TRAFFIC ADMINISTRATION ORDERS: GENERAL
        Amendments made: No. 369, in page 140, line 22, leave out "and".
        No. 370, in page 140, line 24, at end insert—
        ', and

        (c) subsection (3)(d) has effect as if after "its property" there were inserted ", and no right of re-entry or forfeiture may be enforced against the company in respect of any land,".'.—[Mr. Robert Ainsworth.]

      Schedule 2

        AIR TRAFFIC ADMINISTRATION ORDERS: SCHEMES
        Amendments made: No. 3, in page 144, line 38, leave out "or" and insert "after consulting".
        No. 4, in page 144, line 40, leave out—
        'or the CAA for approval the Secretary of State or the CAA'
        and insert "for approval he".
        No. 5, in page 145, line 30, leave out "and the CAA".
        No. 6, in page 145, line 33, leave out—
        'or, as the case may be, the CAA'.
        No. 7, in page 145, line 34, leave out "and the CAA".
        No. 8, in page 148, line 21, leave out "or the CAA".
        No. 9, in page 148, line 22, leave out "or the CAA".—[Mr. Robert Ainsworth.]

      Schedule 3

        AIR TRAFFIC ADMINISTRATION ORDERS: NORTHERN IRELAND
        Amendments made: No. 371, in page 150, line 6, leave out "and".
        No. 372, in page 150, line 8, at end insert—
        ', and

        (c) paragraph (3)(d) has effect as if after "its property" there were inserted ", and no right of re-entry or forfeiture may be enforced against the company in respect of any land,".'.—[Mr. Robert Ainsworth.]

      Schedule 6

        TRANSFER SCHEMES
        Amendments made: No. 105, in page 162, line 12, at end insert—
        '; and each appropriate part must be taken to have been transferred to a transferee or retained by the transferor.'.
        No. 124, in page 163, line 45, at end insert—
        '(5) Sub-paragraph (6) applies if at the time a transfer scheme comes into force a transferor or transferee under the scheme is—

        (a) a company which is wholly owned by the Crown;

        (b) a company which is wholly owned by the CAA;

        (c) a company which is a wholly owned subsidiary of a company falling within paragraph (a) or (b).

        (6) Paragraphs 9 and 10 cease to apply in relation to the scheme concerned at the time when the transferor or any one of the transferees under the scheme ceases to be a company which falls within any of paragraphs (a) to (c) of sub-paragraph (5).'.
        No. 106, in page 168, line 1, leave out from "scheme" to end of line 4 and insert—
        'any provision of an agreement to which the transferor was not a party, any statutory provision or any provisions of a document (other than an agreement) related to the property, rights or liabilities transferred to the transferee.'.
        No. 107, in page 168, line 39, at end insert—
        '(2A) From the coming into force of the scheme any person (other than the transferee) is to have the same rights, powers and remedies for ascertaining, perfecting or enforcing a right or liability transferred to the transferee under the scheme as he would have had if the right or liability had at all times been a right or liability of the transferee.'.
        No. 108, in page 168, line 40, leave out "the transferee" and insert—
        'which the transferee or any other person'.
        No. 109, in page 169, line 10, leave out "by or against" and insert "against or by".
        No. 110, in page 169, line 11, leave out "by or against" and insert "against or by".
        No. 111, in page 171, line 11, after "person" insert "falling within sub-paragraph (3)".
        No. 112, in page 171, line 13, leave out "a person or" and insert "another person or other".
        No. 113, in page 171, line 24, at end insert—
        '25.—(l) Paragraphs 12 to 18 and 20 to 24 have effect as if references to a transfer scheme or schemes included references to—

        (a) an agreement or agreements under paragraph 9 or II;

        (b) n agreement or agreements treated as made under paragraph 10.

        (2) Where paragraph 14 has effect by virtue of sub-paragraph (1), the reference in paragraph 14(2)(b) to an agreement under paragraph 11 has effect as if it were a reference to a subsequent agreement under paragraph 11.
        (3) Paragraph 19 has effect in relation to an agreement under paragraph II as it has effect in relation to an agreement made under paragraph 5 or 9.
        (3) Where paragraphs 12 to 24 have effect in relation to an agreement under paragraph 11 as it has effect in relation to an agreement made under paragraph 5 or 9.
        (4) Where paragraphs 12 to 24 have effect in relation to—

        (a) an agreement under paragraph 9 or 11, or

        (b) an agreement treated as made under paragraph 10,

        references to a transferor or a transferee have effect as references to a transferor or a transferee under the agreement.'.—[Mr. Robert Ainsworth.]

      Schedule 7

        TRANSFER SCHEMES: TAX
        Amendments made: No. 114, in page 173, line 20, at end insert—
        '(1A) This paragraph is not to prejudice paragraph 2.'.
        No. 115, in page 173, line 42, leave out "and"
        No. 116, in page 173, line 44, leave out—
        'and at the time of acquisition'
        and insert ", and
        (c) the companies were associated companies at the time of acquisition.'.
        No. 117, in page 174, line 18, leave out "and"
        No. 118, in page 174, line 20, leave out—
        'and at the time of acquisition'
        and insert ", and
        (c) the companies were associated companies at the time of acquisition.'.
        No. 119, in page 174, line 49, leave out "and".
        No. 120, in page 175, line 2, leave out—
        'and at the time of acquisition'
        and insert ", and

        (c) the companies were associated companies at the time of acquisition.'.

        No. 121, in page 178, line 22, at end insert—

        'Agreements
        20.—(1) Sub-paragraph (2) applies if the effect of—

        (a) an agreement made under paragraph 9 or 11 of Schedule 6, or

        (b) an agreement treated as made under paragraph 10 of Schedule 6,

        is to modify the effect of a transfer scheme.
        (2) This Schedule, the 1988 Act, the 1990 Act and the 1992 Act are to have effect as if—

        (a) the scheme had been made as modified, and

        (b) anything done by or in relation to the preceding holder had (so far as relating to the property, rights or liabilities affected by the modification) been done by or in relation to the subsequent holder.

        (3) Sub-paragraph (4) applies to a disposal of an asset if the disposal—

        (a) is effected in pursuance of an agreement made or treated as made under paragraph 9 or 10 of Schedule 6, and

        (b) is the grant of a lease of land or the creation of other rights and liabilities over land.

        (4) For the purposes of the 1992 Act the disposal is to be taken (in relation to the person to whom it is made as well as the person making it) to be for a consideration such that no gain or loss accrues to the person making it.
        (5) Section 171(1) of the 1992 Act (provision in relation to disposal of assets from one member of a group of companies to another member of the group) does not apply if sub-paragraph (4) applies to the disposal in question.
        (6) References in this paragraph to an agreement include references to the agreement as varied in accordance with a direction under paragraph 19(4) of Schedule 6.
        (7) For the purposes of sub-paragraph (2) the preceding holder is the person who without the modification—

        (a) became (under the transfer scheme concerned) entitled or subject to the property, rights or liabilities affected by the modification, or

        774

        (b) remained (despite the transfer scheme concerned) entitled or subject to the property, rights or liabilities affected by the modification,

        as the case may be.
        (8) For the purposes of sub-paragraph (2) the subsequent holder is the person who (in consequence of the modification) becomes, or resumes being, entitled or subject to the property, rights or liabilities affected by the modification.'.—[Mr. Robert Ainsworth.]

      Schedule 8

        AMENDMENTS ABOUT AIR TRAFFIC
        Amendments made: No. 130, in page 181, line 17, after "2000" insert—
        'or of an order under section (Orders for possession of aerodromes, etc.) of that Act'.
        No. 131, in page 181, line 21, after "2000" insert—
        'or an order under section (Orders for possession of aerodromes, etc.)'. of that Act'.
        No. 132, in page 181, line 30, after "2000" insert—
        'or of an order under section (Orders for possession of aerodromes, etc.)'.
        No. 133, in page 181, line 32, after "2000" insert—
        'or an order under section (Orders for possession of aerodromes, etc.) of that Ace.—[Mr. Robert Ainsworth.]

      New Clause 6

        AIR QUALITY
        '.—Where a local authority declares an air quality management area in accordance with section 83(1) of the Environment Act 1995, it may apply to the Secretary of State to direct the Highways Agency to take such measures as the authority has calculated to be effective in reducing air pollution, from specified roads administered by the Agency, in order to meet national air quality objectives within its area.'.—[Mr. Don Foster.]
        Brought up, and read the First time.
        Mr. Don Foster: I beg to move, That the clause be read a Second time.
        After the excitement of discussing the future of National Air Traffic Services and then the future of national security, we come to the important issue of air quality. All hon. Members will be aware of the concern in many quarters about the quality of our air. Some estimates, not least from the British Medical Association, tell us that as many as 24,000 people die unnecessarily each year because of air pollution caused predominantly by the exhaust fumes from vehicles on our roads.
        Air quality and its improvement are of considerable importance in the effort not only to reduce the number of lives lost but to improve the quality of life for those millions of people who suffer from asthma, which is again associated very directly with fumes from vehicle exhausts.
        In Committee, we were delighted that some positive announcements were made by the Government, not least by the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Streatham (Mr. Hill)—or "St. Reatham", as we came to know him. However, I was disappointed that he did not accept some of our amendments in respect of low emission zones or vehicle emission testing.
        New clause 6 is another attempt to persuade the Government to move a little further. It would give local authorities a more direct way of getting the compliance of

        775
        the Highways Agency in measures to reduce air pollution. It would allow a local authority to apply to the Secretary of State to direct the Highways Agency to take any measures that the local authority considered to be effective in reducing air pollution from roads in its area that were administered by the Highways Agency.
        In Committee, the Minister was quite positive about the broad principle of improving air quality, but there are a number of matters on which we seek further commitments. I have three questions of which I have given the Minister some advance notice, so I hope that he will respond positively.
        The first relates specifically to the work that local authorities have to do in developing their local transport plans. Hon. Members will be aware that the plans have to be completed by the end of June. However, when local authorities draw up their plans they do not know whether the Government will require them to declare air quality management areas. As the Minister knows only too well, the deadline for those is not until October. If the Government subsequently require local authorities to introduce air quality management areas that might include a low emissions zone or roadside emission testing procedures, can the Minister confirm that the enforcement activities that will be required will be considered to be consistent with the aims of the local transport plan that will have to have been produced within the next few days?
        Secondly, the Minister agreed that there would be some merit in extending the powers of traffic wardens so that they would have the ability to stop vehicles and require them to have their emissions tested. The Minister thought that that was a good idea in principle, but said that he did not want to agree to it without further consultation, particularly with the Motorists Forum. The Minister will be aware that that consultation has now been completed and that the forum has sent him a detailed report, so I hope that he can tell us when he expects to make a decision on whether to extend the powers of traffic wardens. In that regard, how will local authorities be expected to pay for emissions testing?
        In Committee, the Minister helpfully agreed to extend the possible uses of moneys raised by congestion charging or workplace parking charging to offset some of the costs of emissions testing. However, some local authorities may choose not to use the powers in the Bill to introduce such charging. What assistance will the Government give to local authorities that wish to introduce more stringent emissions testing, but not the additional powers?
        10.15 pm
        On a number of occasions in Committee, Labour Members raised the point that when a local authority is required to develop strategies to reduce air pollution in its area, some of the measures that it would like to take are outside its control, not least because there is clear evidence that many emissions are likely to come from roads that are outside the local authority's control, especially trunk roads and motorways. If a local authority is required to reduce air pollution in its area, and yet has no control over the activities that take place on trunk roads or motorways, it is powerless to achieve the very objectives that the Government are rightly setting it.
        What can the local authority do about that? The obvious step is to work in conjunction with the Highways Agency, which is in a position to do something. The agency has
        776
        said that it is anxious to work with local authorities in developing local transport plans and other strategies to reduce pollution and congestion. One would think that everything in the garden was rosy, and that the local authority could say to the Highways Agency, "We have a lot of problems with pollution from your roads. Will you do something about it?" One would hope that the answer would always be yes. The sad truth is that that is not always the case.
        I know that the Minister is very well briefed on the problem in Sheffield. The local authority wanted to reduce pollution in the Tinsley area of Sheffield, but the main concern was pollution from the M 1. Sheffield council asked the Highways Agency for help in reducing the speed limit on that section of the motorway. The evidence is that such a move would reduce pollution and, as a by-product, reduce congestion. As the Minister knows, despite all the evidence of speed limit reductions on the M21 reducing congestion and pollution, the Highways Agency was unwilling to accede to Sheffield council's request.
        The new clause would ensure that the local authority could at least say to the Secretary of State, "If you agree with our proposals, will you make it a requirement on the Highways Agency to enact them?" In that way, we would have joined-up thinking between local government, central Government and the Highways Agency. They would all work together with the aim of reducing congestion and air pollution.
        The Government, and in particular the Minister, have given helpful indications of their intention to take this further. However, it is about time that the Government showed a real commitment to the issue by including in the Bill measures that would make this proposal a reality, rather than promising that that will happen at some time in the future.
        I hope that the Government are prepared to accept the new clause.
        The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill): I would like to make a few general observations about the new clause, moved so eloquently by the hon. Member for Bath (Mr. Foster), before dealing with his specific questions.
        The new clause would allow the Secretary of State to direct the Highways Agency—which I shall refer to as the HA—to take specific measures, such as reducing speed limits on trunk roads and motorways, with the aim of reducing air pollution within air quality management areas—which I shall refer to as AQMAs. Those are areas identified by the local authority where the air quality objectives, as prescribed in the air quality regulations 2000, are unlikely to be met.
        Where an AQMA has been designated, the local authority has to draw up an action plan setting out the measures it intends to take in pursuit of air quality objectives. Where the actions needed to improve air quality in an AQMA are outside the local authority's responsibility, such as the case cited by the hon. Gentleman—the reduction of pollution from a trunk road and motorway—the local authority's plan would have to show what action would need to be taken by the HA.
        I can fully understand the principles behind the new clause. Local authorities will no doubt have concerns about working towards achieving the air quality objectives

        777
        in their areas, especially where the action required is outside their control. I also agree that it is important for local authorities to have the full support of the HA when they designate their AQMAs and draw up action plans.
        However, the provision is unnecessary. It would allow the Secretary of State to direct the HA to take action, including imposing slower speed limits on trunk roads or motorways within an air quality management area. However, the Secretary of State already has powers, under the Road Traffic Regulation Act 1984, to regulate speed on trunk roads and motorways; that is carried out by the HA.
        The HA already has a role to play within the local air quality management—or LAQM—process. First, it is a statutory consultee under schedule 11 of the Environment Act 1995. Local authorities therefore have to consult the agency on their air quality reviews and assessments, their proposals for AQMAs and their AQMA action plans. The HA has also provided a technical advice document for local authorities to use when carrying out the review and assessment process.
        Secondly, the HA will have to work alongside those local authorities that designate air quality management areas covering trunk roads and motorways where traffic levels are the main contributors to local air pollution problems. The HA is committed to working with local authorities, and is encouraging local authorities to set up small working parties, which would include the relevant HA area and route managers, to identify any possible HA measures that may be taken in pursuit of the air quality objectives.
        The HA could take several measures in pursuit of the air quality objectives in AQMAs. For example, better use could be made of the existing messaging service on motorway gantries, such as an advanced warning system of incidents on motorways. The HA is also working with transport operators to encourage people to use public transport.
        On the specific issue of introducing slower speed limits on motorways, the HA is not opposed to that in principle, but would want to consider each case on its merits. In considering any such measures on its roads, the HA would have to have regard to the following criteria: safety; economy; integration; environment and accessibility.
        All new trunk roads are now subject to environmental impact assessment in accordance with an EU Directive. That assessment includes considering air quality impacts evaluated under the air quality strategy. Local authorities are always consulted on any such proposals.
        It is evident that the HA is already fully involved in the LAQM process; it will be working closely with local authorities during the action plan stage to identify action that it can take, bearing in mind the cost-effectiveness of those measures. Furthermore, should local authorities experience any difficulties in liaising with the HA, we would encourage them to approach my Department for further advice.
        I therefore hope that the House will agree that, although the principles behind the new clause are to be welcomed, it would not be appropriate to accept it for the reasons that I have outlined. However, before I urge the hon. Gentleman to withdraw it, I shall deal with the questions
        778
        that he raised. I am grateful for the notice that he has given me of the questions. That reflects the extremely close working relationship that we developed in Committee over many hours and months and the singular experience that he and I had in a lonely Westminster radio studio in the middle of the night on Thursday 4 May and Friday 5 May.
        First, the hon. Gentleman asked whether I could confirm that, where air quality management areas are declared, enforcement activities will be considered to be consistent with the objectives of the authority's local transport plan. We acknowledge the fact that local authorities are having to complete their local transport plans before they have completed their reviews and assessments. The majority, however, should by now have a clear view of any major local air quality problems and their likely causes.
        In our revised local air quality management statutory guidance entitled, "Air Quality and Transport", which was issued to local authorities on 6 March 2000, we have advised local authorities to ensure that their local transport plans contain all the air quality information that is available at the time, even if it is only provisional. Where possible, they should also reflect the likely designation of any AQMAs. It is important for local authorities to make sure that the LAQM is closely linked into the local transport process, particularly because the plans will be judged by their links to air quality issues.
        Secondly, the hon. Gentleman asked about authorities that declare air quality management areas, which they are under a statutory obligation to do. He asked whether I would make additional funds available to authorities to fund the designation of AQMAs and the development and enforcement of statutory air quality action plans.
        We recognise that local authorities' air quality management duties have financial implications. Since 1997–98, we have made provision in the annual revenue support grant settlement to assist the running costs associated with those duties, including undertaking the air quality reviews and assessments, designating any air quality management areas, drawing up action plans and undertaking public consultation exercises. At the same time, we introduced a programme of supplementary credit approvals—that is to say additional borrowing powers—to support the necessary capital expenditure on air quality reviews and assessments. More than £12 million has been awarded so far. Letters inviting SCA bids for expenditure in 2000–01 were sent to authorities in February.
        On the development and enforcement of AQMA action plans, let me say that local authorities can use their existing powers and controls, such as local air pollution control, domestic smoke control, transport and land use planning, to implement their action plans for achieving the air quality objectives. Authorities may also, for example, wish to use the local transport plan process to bid for funding for transport projects that aim to reduce transport-related emissions and improve air quality. Local authorities declaring smoke control areas may apply for SCAs to cover the necessary costs of conversions in domestic premises.
        Mr. Michael Jack: I have listened carefully to the Minister's arguments about the powers of local authorities. Will he help me on a point of detail? Do local authorities have any powers to promote public awareness

        779
        about the nature of the difference between old and new vehicles and about the contribution that newer vehicles with newer technology can make to improving overall air quality in a particular location?
        Mr. Hill: I shall be entirely candid with the right hon. Gentleman. I am not sure that specific funding lines are available for that purpose, but every local authority has ample local financial resources. As the right hon. Gentleman knows, being a resident of Lambeth during his sojourn in the capital, many local authorities produce a range of publications in which they raise such issues with the public. I am grateful to the right hon. Gentleman for drawing attention to such publicity.
        10.30 pm
        On funding for AQMAs, it is up to local authorities to ensure that the measures proposed in their plans are proportionate and cost-effective. Some of the actions needed to improve air quality may lie outside the local authority's responsibility, and it will have to work closely with other bodies, such as the Environment and Highways Agencies.
        I turn now to the query of the hon. Member for Bath about the timing of conclusions on the Motorists' Forum's recommendations and the possible consultations on extending emissions tests and additional powers. I am grateful to the Motorists' Forum, which represents a broad range of interests, for its work on this matter. We are actively considering its recommendations and will announce our decisions in due course. My Home Office colleagues and I propose to consider additional powers.
        The hon. Member for Bath raised the interesting case of Sheffield, where, last Thursday, Labour increased its share of the vote, but the Liberal Democrats increased their number of seats on the council. That is a consequence of the first-past-the-post system which the hon. Gentleman may not wholly deprecate.
        I shall correct the version of events in Sheffield that the hon. Gentleman related to the House. Sheffield city council suggested to the Highways Agency that it should impose a 50 mph speed limit on the M1 where it passes through the Meadowhall area, which colleagues assure me is called Tinsley. Sheffield had calculated that if speed limits on the motorway were reduced from 80 mph to 50 mph where it passed through the city, there would be a significant reduction in pollution. The optimum speed for fuel consumption and emissions is at a constant speed between 40 and 50 mph.
        Mr. Don Foster: Lest it be thought that a Transport Minister is not aware of the motorway speed limit, I give the hon. Gentleman the opportunity to correct the record immediately because I am sure that when he said that the speed limit was 80 mph, he meant 70 mph.
        Mr. Hill: It is a matter of public record that I am not a driver and have never learned to drive a car, so these matters are not always at the forefront of my mind, but I willingly accept the hon. Gentleman's correction. I shall now proceed to correct his version of events in Sheffield.
        Contrary to the reports, the council's suggestion was not refused by the Highways Agency without consideration. However, the issue was not taken forward
        780
        after the agency pointed out that due to the severe congestion on the M1 in that area at peak periods, speeds were already down to less than 50 mph.
        If speed reduction measures were to be introduced, we would need to be sure that the benefits of improved air quality would outweigh the economic impact of lower speed limits on journey times. Emissions from vehicles on the trunk road network are usually more significant for air quality in urban areas. Traffic on such roads is unlikely to be travelling at the legal speed limit—the point raised by the hon. Gentleman—and, especially in congested areas, will cause far more damage to the environment in terms of emissions than if it were travelling at the legal speed limit.
        With those explanations and responses, I invite the hon. Gentleman to withdraw the motion.
        Sir David Madel: Following on from the remarks made by the hon. Member for Bath (Mr. Foster) and the Minister's saying that, if district councils or town councils want advice on how to interpret the air quality rules, he will be happy to provide it, I rise to raise a specific case in my constituency: that of the extremely congested A5 route through the centre of Dunstable.
        The Minister will be aware of our lengthy campaign to get a bypass. As long as there is no bypass, air quality worsens. An additional cause for urgency is that the Secretary of State for the Environment, Transport and the Regions has designated Luton and Dunstable as a growth area for housing; therefore, more people will be affected if the problem continues. Furthermore, without the provision of the bypass, 11 Dunstable schools, with hundreds of children, that lie close to the A5 will continue to endure the massive pollution generated by crawling, stop-start traffic. Similarly, many houses are affected by the problem. The benefit equation is, therefore, massively in favour of the bypass being built.
        We have campaigned for many years to get the bypass built. I hope that the Minister will give a favourable hearing to councils if, following Thursday's elections, they approach him asking for advice on whether they can use air quality rules to hasten the building of the bypass. The Minister might wonder what last Thursday has to do with the new clause. The fact is that, during the district and town council elections in Dunstable, only the Conservative party campaigned for a full bypass; Labour and the Liberal Democrats have always been uncertain, even wobbly, on the issue. The result of Thursday's poll was that every single ward in Dunstable returned a Conservative district councillor; and a town council comprising 17 Labour and three Conservative councillors was transformed into one comprising 17 Conservatives and three Labour representatives. The people of Dunstable have given a clear and massive endorsement to an early start being made to the bypass, not least on grounds of air quality.
        I make those points to the Minister in the hope that my words, and the council's representations, will cause him to look most favourably on starting a public inquiry into the bypass—not least after what has been said during this important debate about people being badly affected by poor air quality resulting from massive traffic congestion, which we certainly have in Dunstable.
        Mr. Stephen O'Brien: Conditions in my constituency are not untypical of those in many shire

        781
        county constituencies. There is no motorway, but many arterial routes and trunk roads traverse the constituency, and many of my constituents are affected by the traffic passing along those routes. The Minister will be familiar with the case, as, on behalf of my constituents, I have been a prolific letter writer on the subjects of speed and safety on the A41, the A49 and the A51, along with the less fast, but tighter and more difficult to negotiate green route that enters my constituency through Audlem in the southernmost part.
        There is some debate about maps and whether many continental drivers of articulated lorries see on the map the green route, which appears to be the most direct route, and so come through my constituency, causing road congestion problems. However, my argument tonight focuses on the relationship between speed, air quality and new regulations that will permit lorry weights to be increased from 40 to 44 tonnes. There is real concern centring on arterial routes, such as the A49. Lorry drivers are equipped with mobile communications equipment, so by the time they go over the Thelwall viaduct on the M6 coming south, they know whether there is congestion around Birmingham. If there is, they leave the M6 and come down the A49. through Warrington and through the constituency of the hon. Member for Weaver Vale (Mr. Hall), before entering my constituency. The lorries then plough through my constituency before joining the M54.
        The lorries do not follow direct motorway routes and, as we well know, air quality relates to lorries getting up to speed. On a non-motorway route, there are many bends and hills and, especially on the A49, sharp bends to negotiate. Lorries slow down, particularly owing to their added weight. They then have to get back up to speed; they are keen to travel, when possible, at the maximum speed permitted.
        I hope that the Minister will take into account that issue in assessing the impact of the increase in lorry weights, given the nature of the roads on which lorries habitually travel partly because of congestion, particularly around Birmingham on the M6 leading up to the junction with the M5. As the many letters that the Minister and I have exchanged will testify, that has a real impact on my constituents.
        I am not sure that the new clause would address the problem, but I listened carefully to the Minister. In assessing air quality measures relating to the speed and routing of lorries, it will be important to take into account measurements on lorries' ability to maintain speed. That in itself can lead to many more air pollutant quotas—however one measures it.
        I urge the Minister to consider incentives for lorries once again to travel on the main motorway network, as that would address many of the concerns and alleviate many of the serious and legitimate worries of my constituents, many of whom live on those routes. Owing to the position of the original tracks, the houses are perilously close to the road, resulting in concern and danger.
        Mr. Don Foster: If the hon. Member for Eddisbury (Mr. O'Brien) studied new clause 6 closely, he would see that it would bring him a great deal of comfort. It would
        782
        enable his local authority to feel confident that it could work closely with the Highways Agency to consider the issues of speed on motorways in his area. If the Highways Agency were not prepared so to work with the local authority, there would be an opportunity to apply to the Secretary of State to direct that close co-operation.
        I am absolutely delighted with the Minister's introductory remarks. I welcome his description of my remarks as eloquent. I was slightly taken aback by his description of our alleged close working relationship and somewhat surprised that he was prepared to refer to the time that we spent together late at night in a radio studio. He spent two hours defending the indefensible as further election disasters befell the party that he represents, while I was able to celebrate the success of my new and welcome hon. Friend the Member for Romsey (Sandra Gidley).
        The Minister acknowledged my generosity in giving him advance notice of some of the questions that I would ask and, indeed, some of the points that I would raise, including reference to the situation in Sheffield. It was clear that he was not even aware of the speed limits on motorways, let alone the part of Sheffield to which we referred—Tinsley.
        The Minister was not as thoroughly briefed as one might have hoped because he suggested that the Highways Agency did not want to introduce the speed limit proposed by the council because of congestion in the area at peak times. I hope that, when he checks the information with which he was provided, he will note that Sheffield council suggested to the Highways Agency a variable speed limit, as on the M25, to take into account that very concern.
        The problem is that, despite the fact that Sheffield council has made that proposition, there is still not an opportunity for it and the Highways Agency to work together. The council has nobody to whom it can turn to resolve that dispute, and that is why the new clause is so important.
        In his response, the Minister chose to adopt the technique of using acronyms. I do not blame him for that, as it speeds up the debate. I am well aware that, when an LA is working on its LAQM, which of course is part of the Government's NAQS and, as the Minister rightly said, is related to the LA's LTP, and could include the option of an LEZ, although the Minister has not yet given approval for LEZs, the LA must have the full support of the HA, as the Minister said, not least if the LA goes on to develop an AQMA.
        Without new clause 6, there is no guarantee that the LA will get the full support of the HA. The Minister suggested that, if the LA is unhappy, it should seek advice from the DETR. However, it is unlikely that anything will happen, as the case in Sheffield demonstrates so eloquently.
        Mr. Peter Atkinson rose—
        Mr. Foster: I give way to the hon. Gentleman, but time is pressing.
        Mr. Atkinson: I am grateful to the hon. Gentleman, who produced a tour de force of acronyms. How would the new clause help constituents of mine, who live on a trunk road with a village on either side? The local

        783
        authority wants a bypass there. If the local authority declares it a special air quality management area, what will the Highways Agency do? Will it be forced to build the bypass, which it otherwise would not?
        10.45 pm
        Mr. Foster: The hon. Gentleman refers to an AQMA, as I am sure that he knows. One way of improving his chances of success would be to turn it into an LEZ. He makes a fair point. There will be occasions when a local authority wants to achieve certain aims and wishes to get the support of the Highways Agency, but the Highways Agency disagrees. The new clause would allow the local authority to see whether the Secretary of State was willing to support it in that endeavour and, if so, to apply to him to instruct the Highways Agency to carry out the necessary work.
        In the hon. Gentleman's example, it is unlikely that, even if the local authority wanted a bypass, the Secretary of State would give his approval and make it a requirement on the Highways Agency. However, there are many other cases—I gave one example in the Tinsley area of Sheffield—where the joint working of the local authority and the Highways Agency could have been strengthened by the new clause. I am disappointed that the Minister is not prepared to write it into the Bill. It is an important measure, and I hope that the House will not object too much if I press the motion to a Division.
        Question put, That the clause be read a Second time:—
        The House divided: Ayes 47, Noes 342.

        Division No. 188]

        [10.48 pm

        AYES

        Allan, Richard

        Kennedy, Rt Hon Charles (Ross Skye & Inverness W)

        Ashdown, Rt Hon Paddy

        Ballard, Jackie

        Kirkwood, Archy

        Beggs, Roy

        Livsey, Richard

        Brake, Tom

        Llwyd, Elfyn

        Brand, Dr Peter

        Maclennan, Rt Hon Robert

        Breed, Colin

        Michie, Mrs Ray (Argyll & Bute)

        Bruce, Malcolm (Gordon)

        Moore, Michael

        Burnett, John

        Morgan, Alasdair (Galloway)

        Burstow, Paul

        Oaten, Mark

        Campbell, Rt Hon Menzies (NE Fife)

        Öpik, Lembit

        Rendel, David

        Chidgey, David

        Russell, Bob (Colchester)

        Cotter, Brian

        Sanders, Adrian

        Davey, Edward (Kingston)

        Swinney, John

        Ewing, Mrs Margaret

        Taylor, Rt Hon John D (Strangford)

        Fearn, Ronnie

        Taylor, Matthew (Truro)

        Foster, Don (Bath)

        Tonge, Dr Jenny

        George, Andrew (St Ives)

        Tyler, Paul

        Gidley, Ms Sandra

        Webb, Steve

        Gorrie, Donald

        Welsh, Andrew

        Harris, Dr Evan

        Wigley, Rt Hon Dafydd

        Harvey, Nick

        Willis, Phil

        Heath, David (Somerton & Frome)

        Tellers for the Ayes:

        Hughes, Simon (Southwark N)

        Sir Robert Smith and

        Jones, Nigel (Cheltenham)

        Mr. Andrew Stunell.

        NOES

        Abbott, Ms Diane

        Armstrong, Rt Hon Ms Hilary

        Adams, Mrs Irene (Paisley N)

        Ashton, Joe

        Ainger, Nick

        Atkins, Charlotte

        Ainsworth, Robert (Cov'try NE)

        Banks, Tony

        Alexander, Douglas

        Barnes, Harry

        Allen, Graham

        Battle, John

        Anderson, Donald (Swansea E)

        Bayley, Hugh

        Anderson, Janet (Rossendale)

        Beard, Nigel

        784

        Beckett, Rt Hon Mrs Margaret

        Denham, John

        Bell, Stuart (Middlesbrough)

        Dismore, Andrew

        Benn, Hilary (Leeds C)

        Dobbin, Jim

        Bennett, Andrew F

        Donohoe, Brian H

        Bermingham, Gerald

        Doran, Frank

        Berry, Roger

        Dowd, Jim

        Best, Harold

        Drew, David

        Betts, Clive

        Dunwoody, Mrs Gwyneth

        Blackman, Liz

        Eagle, Angela (Wallasey)

        Blears, Ms Hazel

        Eagle, Maria (L'pool Garston)

        Blizzard, Bob

        Edwards, Huw

        Boateng, Rt Hon Paul

        Efford, Clive

        Borrow, David

        Ellman, Mrs Louise

        Bradley, Keith (Withington)

        Ennis, Jeff

        Bradley, Peter (The Wrekin)

        Field, Rt Hon Frank

        Bradshaw, Ben

        Fisher, Mark

        Brown, Rt Hon Nick (Newcastle E)

        Fitzpatrick, Jim

        Brown, Russell (Dumfries)

        Fitzsimons, Mrs Lorna

        Browne, Desmond

        Flint, Caroline

        Buck, Ms Karen

        Flynn, Paul

        Burden, Richard

        Follett, Barbara

        Burgon, Colin

        Foster, Rt Hon Derek

        Butler, Mrs Christine

        Foster, Michael J (Worcester)

        Byers, Rt Hon Stephen

        Foulkes, George

        Caborn, Rt Hon Richard

        Fyfe, Maria

        Campbell, Ronnie (Blyth V)

        Galbraith, Sam

        Cann, Jamie

        Gapes, Mike

        Caplin, Ivor

        Gardiner, Barry

        Casale, Roger

        George, Bruce (Walsall S)

        Caton, Martin

        Gibson, Dr Ian

        Cawsey, Ian

        Gilroy, Mrs Linda

        Chapman, Ben (Wirral S)

        Godman, Dr Norman A

        Chaytor, David

        Godsiff, Roger

        Church, Ms Judith

        Goggins, Paul

        Clapham, Michael

        Golding, Mrs Llin

        Clark, Rt Hon Dr David (S Shields)

        Gordon, Mrs Eileen

        Clark, Dr Lynda (Edinburgh Pentlands)

        Griffiths, Jane (Reading E)

        Griffiths, Nigel (Edinburgh S)

        Clark, Paul (Gillingham)

        Griffiths, Win (Bridgend)

        Clarke, Charles (Norwich S)

        Grogan, John

        Clarke, Eric (Midlothian)

        Hall, Mike (Weaver Vale)

        Clarke, Rt Hon Tom (Coatbridge)

        Hall, Patrick (Bedford)

        Clarke, Tony (Northampton S)

        Hamilton, Fabian (Leeds NE)

        Clelland, David

        Hanson, David

        Clwyd, Ann

        Harman, Rt Hon Ms Harriet

        Coaker, Vernon

        Heal, Mrs Sylvia

        Coffey, Ms Ann

        Healey, John

        Coleman, Iain

        Henderson, Doug (Newcastle N)

        Colman, Tony

        Henderson, Ivan (Harwich)

        Connarty, Michael

        Hepburn, Stephen

        Cook, Rt Hon Robin (Livingston)

        Heppell, John

        Corbett, Robin

        Hesford, Stephen

        Corbyn, Jeremy

        Hewitt, Ms Patricia

        Corston, Jean

        Hill, Keith

        Cousins, Jim

        Hinchliffe, David

        Cox, Tom

        Hodge, Ms Margaret

        Cranston, Ross

        Hoey, Kate

        Crausby, David

        Home Robertson, John

        Cryer, Mrs Ann (Keighley)

        Hood, Jimmy

        Cryer, John (Hornchurch)

        Hoon, Rt Hon Geoffrey

        Cummings, John

        Hope, Phil

        Cunningham, Rt Hon Dr Jack (Copeland)

        Hopkins, Kelvin

        Howarth, Alan (Newport E)

        Cunningham, Jim (Cov'try S)

        Howarth, George (Knowsley N)

        Curtis-Thomas, Mrs Claire

        Howells, Dr Kim

        Dalyell, Tam

        Hoyle, Lindsay

        Darling, Rt Hon Alistair

        Hughes, Ms Beverley (Stretford)

        Darvill, Keith

        Humble, Mrs Joan

        Davey, Valerie (Bristol W)

        Hurst, Alan

        Davidson, Ian

        Hutton, John

        Davies, Rt Hon Denzil (Llanelli)

        Iddon, Dr Brian

        Davies, Geraint (Croydon C)

        Illsley, Eric

        Davis, Rt Hon Terry (B'ham Hodge H)

        Jackson, Ms Glenda (Hampstead)

        Jackson, Helen (Hillsborough)

        Dawson, Hilton

        Jamieson, David

        Dean, Mrs Janet

        Jenkins, Brian

        785

        Johnson Alan (Hull W & Hessle)

        Naysmith, Dr Doug

        Johnson, Miss Melanie (Welwyn Hatfield)

        Norris, Dan

        O'Brien, Bill (Normanton)

        Jones, Mrs Fiona (Newark)

        O'Brien, Mike (N Warks)

        Jones, Helen (Warrington N)

        O'Hara, Eddie

        Jones, Dr Lynne (Selly Oak)

        O'Neill, Martin

        Jones, Martyn (Clwyd S)

        Organ, Mrs Diana

        Jowell, Rt Hon Ms Tessa

        Osborne, Ms Sandra

        Keeble, Ms Sally

        Palmer, Dr Nick

        Keen, Alan (Feltham & Heston)

        Pearson, Ian

        Keen, Ann (Brentford & Isleworth)

        Pendry, Tom

        Kemp, Fraser

        Perham, Ms Linda

        Kennedy, Jane (Wavertree)

        Pickthall, Colin

        Khabra, Piara S

        Pike, Peter L

        Kidney, David

        Plaskitt, James

        Kilfoyle, Peter

        Pollard, Kerry

        King, Andy (Rugby & Kenilworth)

        Pond, Chris

        King, Ms Oona (Bethnal Green)

        Pope, Greg

        Kumar, Dr Ashok

        Pound, Stephen

        Ladyman, Dr Stephen

        Prentice, Ms Bridget (Lewisham E)

        Lawrence, Mrs Jackie

        Prentice, Gordon (Pendle)

        Lepper, David

        Prescott, Rt Hon John

        Leslie, Christopher

        Primarolo, Dawn

        Levitt, Tom

        Prosser, Gwyn

        Lewis, Ivan (Bury S)

        Purchase, Ken

        Lewis, Terry (Worsley)

        Quin, Rt Hon Ms Joyce

        Liddell, Rt Hon Mrs Helen

        Quinn, Lawrie

        Linton, Martin

        Radice, Rt Hon Giles

        Lloyd, Tony (Manchester C)

        Raynsford, Nick

        Lock, David

        Reed, Andrew (Loughborough)

        Love, Andrew

        Reid, Rt Hon Dr John (Hamilton N)

        McAvoy, Thomas

        Robinson, Geoffrey (Cov'try NW)

        McCabe, Steve

        Roche, Mrs Barbara

        McCafferty, Ms Chris

        Rooney, Terry

        McDonagh, Siobhain

        Ross, Ernie (Dundee W)

        Macdonald, Calum

        Rowlands, Ted

        McDonnell, John

        Roy, Frank

        McFall, John

        Ruane, Chris

        McGuire, Mrs Anne

        Ruddock, Joan

        McIsaac, Shona

        Ryan, Ms Joan

        McKenna, Mrs Rosemary

        Sarwar, Mohammad

        Mackinlay, Andrew

        Sawford, Phil

        McNulty, Tony

        Sedgemore, Brian

        MacShane, Denis

        Sheerman, Barry

        Mactaggart, Fiona

        Shipley, Ms Debra

        McWalter, Tony

        Simpson, Alan (Nottingham S)

        McWilliam, John

        Singh, Marsha

        Mahon, Mrs Alice

        Skinner, Dennis

        Mallaber, Judy

        Smith, Rt Hon Andrew (Oxford E)

        Marsden, Gordon (Blackpool S)

        Smith, Angela (Basildon)

        Marsden, Paul (Shrewsbury)

        Smith, Rt Hon Chris (Islington S)

        Marshall, David (Shettleston)

        Smith, Jacqui (Redditch)

        Marshall-Andrews, Robert

        Smith, John (Glamorgan)

        Martlew, Eric

        Smith, Llew (Blaenau Gwent)

        Maxton, John

        Snape, Peter

        Meacher, Rt Hon Michael

        Soley, Clive

        Merron, Gillian

        Southworth, Ms Helen

        Michael, Rt Hon Alun

        Squire, Ms Rachel

        Michie, Bill (Shef'ld Heeley)

        Starkey, Dr Phyllis

        Milburn, Rt Hon Alan

        Steinberg, Gerry

        Miller, Andrew

        Stevenson, George

        Moffatt, Laura

        Stewart, David (Inverness E)

        Moonie, Dr Lewis

        Stewart, Ian (Eccles)

        Moran, Ms Margaret

        Stinchcombe, Paul

        Morgan, Ms Julie (Cardiff N)

        Stoate, Dr Howard

        Motley, Elliot

        Strang, Rt Hon Dr Gavin

        Morris, Rt Hon Ms Estelle (B'ham Yardley)

        Stringer, Graham

        Stuart, Ms Gisela

        Morris, Rt Hon Sir John (Aberavon)

        Taylor, Rt Hon Mrs Ann (Dewsbury)

        Mountford, Kali

        Taylor, Ms Dan (Stockton S)

        Mudie, George

        Taylor, David (NW Leics)

        Mullin, Chris

        Temple-Morris, Peter

        Murphy, Denis (Wansbeck)

        Thomas, Gareth (Clwyd W)

        Murphy, Jim (Eastwood)

        Thomas, Gareth R (Harrow W)

        Murphy, Rt Hon Paul (Torfaen)

        Timms, Stephen

        786

        Tipping, Paddy

        Wicks, Malcolm

        Todd, Mark

        Williams, Rt Hon Alan (Swansea W)

        Touhig, Don

        Trickett, Jon

        Williams, Alan W (E Carmarthen)

        Truswell, Paul

        Williams, Mrs Betty (Conwy)

        Turner, Dennis (Wolverh'ton SE)

        Wills, Michael

        Turner, Dr Desmond (Kemptown)

        Winnick, David

        Turner, Dr George (NW Norfolk)

        Wood, Mike

        Turner, Neil (Wigan)

        Woolas, Phil

        Twigg, Derek (Halton)

        Worthington, Tony

        Twigg, Stephen (Enfield)

        Wright, Anthony D (Gt Yarmouth)

        Tynan, Bill

        Wright, Dr Tony (Cannock)

        Vaz, Keith

        Wyatt Derek

        Ward, Ms Claire

        Wareing, Robert N

        Tellers for the Noes:

        Watts, David

        Mr. Kevin Hughes and

        Whitehead, Dr Alan

        Mr. Gerry Sutcliffe.

        Question accordingly negative.

      New Clause 14

        COMPETITION TEST FOR EXERCISE OF BUS FUNCTIONS
        '. Schedule (Competition test for exercise of bus functions) contains provision applying a competition test in relation to the exercise of functions relating to quality partnership schemes, ticketing schemes and subsidised local services.'.—[Mr. Hill.]
        Brought up, and read the First time.
        Mr. Hill: I beg to move, That the clause be read a Second time.
        Mr. Deputy Speaker (Mr. Michael J. Martin): With this it will be convenient to discuss the following: Government amendment No. 301.
        Amendment No. 143, in clause 110, page 66, line 23, at end insert—
        '(5) Local services provided under a quality contract scheme made in accordance with section 108 shall be exempt from the provisions of the Competition Act 1998.'.
        Government amendments Nos. 303 to 306 and Government new schedule 1.
        Mr. Hill: New clause 14 brings us to a topic that has excited many commentators in connection with our bus policy proposals, and occupied the Standing Committee more than once: competition.
        We undertook to table amendments on Report to deal with competition issues as they affect the three key local authority functions introduced or enhanced by the Bill: quality partnerships, ticketing schemes and bus subsidy contracts, including frequency enhancements. The new clause and amendments were prepared in full consultation with the competition authorities, the Office of Fair Trading and the Department of Trade and Industry. I am sorry not to have been able to give the House a little more time to consider them, but they do what we said they would do.
        The new clause and amendments achieve three things. First, they provide a special tailor-made regime for the exercise of such powers—rather than the Competition Act 1998, in case that Act might be thought to apply. I think that that concerned Members at an earlier stage. Secondly, they allow a bus operator, for example, to go to the Director General of Fair Trading if that operator thinks that the local authority's powers have been used unfairly. Thirdly—this is, perhaps, the most important point—

        787
        they require the Office of Fair Trading to consider not just any effect that there might be on competition but the wider public interest, including not only bus users but the community in general. For that purpose, we have included special public interest provisions tailored to the circumstances of bus operations, and the sort of benefits that local authorities will legitimately want to achieve through their use of bus powers. Those include better vehicles or facilities, service improvements and reducing or limiting traffic congestion, noise or air pollution. I hope that hon. Members will agree that those special provisions are much more appropriate and helpful to local authorities and to the public than anything in the Competition Act.
        Valerie Davey: Does my hon. Friend agree that the specific new amendments and the way in which the Government are now handling the matter are of particular value in a situation such as that in Bristol, where the bus company has a virtual monopoly, where the public good, as he has indicated, is of special concern to the local authority and the strengthening of local authority's power is to the benefit of the passenger?
        Mr. Hill: I understand my hon. Friend's broad point, but the thrust of the new provisions is not precisely in the direction that she has described. They are designed to deal with possible allegations or suspicions of anti-competitive practices—for example, when ticketing arrangements are introduced—and to create some protection for the public interest where those measures are introduced, so I do not think that they quite attain the objectives that she may hope they do.
        The provisions that I have outlined are in paragraph 2 of the new schedule. That paragraph is the most important part of the provision; otherwise, the schedule is essentially procedural. It provides for local authorities or bus operators to apply to the OFT for a decision—the OFT is, of course, the Office of Fair Trading, but I think that that is a reasonably familiar acronym, which I propose to persist with—or the OFT can look at a case itself if it sees fit.
        The OFT must publish any decisions, with reasons, so that people know where they stand. Properly, the OFT is required to consult interested parties before finalising a decision if it thinks that the competition test is not met. The OFT has powers of direction once a decision has been made, although I am sure that in the vast majority of cases any necessary solutions will be worked out voluntarily.
        The schedule contains provisions for the OFT to obtain information. It merely echoes provisions in other such legislation and contains confidentiality safeguards. Again, I would be surprised if those were much needed in practice, but I hope that the House will agree that it would not be right if bus operators were able to get together at the expense of the public and to frustrate OFT inquiries.
        In addition to the schedule, there are some other amendments. They are mostly technical, but also helpful. For example, amendments Nos. 301 and 304 provide that reducing traffic congestion can be a valid reason for a local authority to bring forward a quality partnership scheme, or to subsidise a bus service. That ensures consistency with the wording of the competition test in paragraph 3 of the new schedule.
        Amendment No. 303 provides that a local authority can vary a ticketing scheme, rather than simply revoke it, as in the Bill at present. Amendments Nos. 305 and 306 are
        788
        consequential drafting changes to provisions in the Transport Act 1985 to make "economy, efficiency and effectiveness"—the best value criteria—the factors that local authorities must take into account in promoting the use of public transport generally in their areas, thus ensuring consistency with their obligations in reaction to bus subsidies in clause 131.
        Opposition amendment No. 143 seeks to make bus services provided under quality contract schemes exempt from the Competition Act. It is substantially the same as an amendment that was debated in Committee. As we made clear on that occasion, the amendment seems to be wholly unnecessary.
        Once a quality contract scheme has been introduced, there is by definition no longer a competitive situation for bus operations. All local services within the quality contract area, unless exempted, will be operated under contract to the local authority. The Competition Act will therefore not apply.
        We further made the point that, if a quality contract were otherwise caught by section 2 of the Competition Act, it would be excluded by virtue of paragraph 5 of schedule 3 to the Act, which states that conduct engaged in to comply with a legal requirement is exempted from the Competition Act. Either way, therefore, we see no need to make further provision.
        I hope that my explanation of the Government amendments is helpful to the House. I hope, too, that hon. Members will feel that these promised amendments will help all concerned by providing a special competition regime that also takes proper account of the public interest objectives that local authorities can—indeed, should—have in the use of their powers.
        I know that competition legislation has been of concern to many hon. Members. It may therefore also help the House if I add that, yesterday, the OFT sent out consultation drafts of the block exemption. The covering letter was sent to the rail industry as well as to the bus industry trade association and local government and underlined the point that the proposed block exemption will apply to multi-modal schemes, not only to the bus industry.
        We believe that that is good news, and I am sure that it will be welcomed by many hon. Members, including my hon. Friend the Member for Wythenshawe and Sale, East (Mr. Goggins), who has already made representations on behalf of the Manchester passenger transport executive. As I predicted in Committee, the OFT is taking forward a block exemption for bus and train ticketing schemes under the 1998 Act. The OFT has listened to representations. I hope that the House will find that reassuring.
        Mr. Syms: In Committee, we spent considerable time discussing competition law. We did so because, if we do not get that matter right, the Bill's entire section on buses will not work. Representations on the Bill have been made by the bus companies, which are concerned that they will have to contend with both a competition regime—particularly under the Competition Act 1998, which came into force on 1 March and made things difficult for them—and the Transport Bill. The companies essentially felt that they were being caught between the Department of Trade and Industry and the Department of the Environment, Transport and the Regions.

        789
        The situation in Committee was not a happy one, primarily because we felt that the legislation would not work. I believe that the proposed regime will be helpful, and therefore welcome the Government's new clause, new schedule and amendments in this group. Nevertheless, the previous muddle was of the Government's own making, with two Departments going in two slightly different directions. The Local Government Association was very concerned about that muddle and made representations on it to the DETR.
        The Opposition would like to see the quality partnership schemes work. For most people in the United Kingdom, buses are their only public transport alternative. The new regime will improve their chance of having such an alternative.
        New clause 14 has been tabled at a relatively late stage in our consideration of the Bill. Have the bus companies been consulted on it? If so, did they have any comments? I am not an expert on buses—although I am a transport spokesman—but I am sure that the bus companies, particularly many of the major ones, have lawyers. As the 1998 Act provides for quite draconian ways in which company directors can be fined if they are anticompetitive, I am perfectly sure that those companies will wish to be consulted on the provision and have their views considered. If they have not been consulted, I hope that the Minister will reassure us that they will be before the Bill is sent to the other place. They should be consulted.
        Have local authorities who have raised the competition issue directly with the Government been consulted on the proposed regime? Local authorities and bus companies are vital to operation of the Government's proposed regime. If they are happy with it, we would be happy.
        11.15 pm
        New clause 14 is sensible, and I am sure that the comprehensive new schedule I will meet the task. However, because of the conflict between two Departments, we have—as the Minister said—a tailor-made regime which I hope is robust.
        The Minister said that the Office of Fair Trading has issued guidance on block exemptions. He said also that bus operators could go to the Director General of Fair Trading for directions, but there was no mention of the cost of doing so. Will there be such a cost on a company? If so, the House ought to be told today.
        We welcome the Government's proposals and hope that there is the widest possible consultation. Bus operators must feel that they can move forward with quality partnerships and quality contracts in the knowledge that the regime will work and is robust. We wish the Government well on this because the travelling public want better services. The industry and local government want a degree of certainty that the new regime will work.
        Mr. Don Foster: Like the hon. Member for Poole (Mr. Syms), I welcome the Government's proposals. The House will be aware that our amendment No. 143 would have much the same effect as the one proposed by the Government, but it is considerably less comprehensive.
        I am disappointed that it has taken such a long time for the Government to come forward with proposals. In Committee on 29 February, the Minister told us that
        790
        parliamentary counsel was busily drafting amendments in this regard. It has taken two and a half months for parliamentary counsel to bring this forward. I hope that time will show that it was worth the wait.
        I am delighted that, at long last, we will begin to have a solution to a problem that was raised by many members of the Committee. The Minister was unwilling to accept a Liberal Democrat proposal that fares and frequency should be included in quality partnerships and quality contracts. The Minister agreed that it would be possible for a local authority working with transport companies in its area to produce an agreement on fares and frequencies, but that that would have to lie outside, but alongside, the statutory quality partnership or quality contract.
        I understand that these amendments refer specifically to new quality partnerships and quality contracts, and do not refer to the non-statutory arrangements that may be made by local authorities with their various transport providers in the area. The Minister was asked about those non-statutory arrangements between a local authority and the transport providers in an area, and whether or not they could fall foul of the Competition Act. He said:
        I cannot give…that assurance. Such timetable agreements may or may not be in breach of the competition rules, but it is for the OFT to make inquiries into that and to come to its own decisions. Since such agreements do not form part of the Bill, it is hardly for me to make a judgment on them.—[Official Report, Standing Committee E, 29 February 2000; c. 794.]
        I am sure that the House will recognise that a large number of the measures that a local authority may wish to take with transport providers in its area will refer specifically to fares and frequency. Indeed, on many occasions in Committee reference was made to the competition in some parts of the country whereby one bus company operates a particular timetable and another bus company introduces a service just a few minutes earlier to try to grab the passengers from the first company. Yet we know from experience that when two bus companies have agreed a timetable—one going on the hour and the other going on the half hour, for example—they have fallen foul of the Competition Act and the current work of the OFT. We hoped that the Minister would table an amendment that brought some comfort to local authorities and bus companies that any such arrangements that they sought to introduce to the benefit of passengers in a particular area would not fall foul of the Competition Act.
        I seek some reassurance from the Minister that the provisions in the amendment, the new clause and the new schedule will ensure that arrangements in respect of fares and frequency will be treated in the same way as the other matters covered by the proposed provisions. I am delighted that we are making progress, but I am not convinced that all the issues have yet been covered.
        Finally, in some parts of the country, including my constituency, local authorities wish to develop voluntary agreements with bus companies without introducing a quality partnership agreement. In some circumstances, particularly when fares and frequency are central issues, it is better to have a voluntary agreement that covers fares and frequency among other issues, rather than making them part of the statutory quality partnership. Again, I would be grateful if the Minister could give some comfort to local authorities such as Bath and North East Somerset council, which is trying to develop a partnership in respect of that dreadful subject that we discussed in

        791
        Committee—tour buses—that there will be some exemptions from the draconian approach adopted by the Office of Fair Trading.
        Mr. Stephen O'Brien: I join my hon. Friend the Member for Poole (Mr. Syms) and other hon. Members in welcoming the Government's proposals. It might be helpful if I put in context my own experience of the operation of competition. Before being elected to the House I was, for my sins—I have many sins—the compliance officer in a large public company in the construction industry. I am conscious of the presence of the Minister for Housing and Planning, who is equally familiar with the construction industry, which is an important example of where the statutory competition provisions bite and are effective or not effective and which shows their effect on businesses and the directors of companies.
        It is well known that in respect of a commodity product where one competitor is indistinguishable from another, there is every incentive—and good commercial reasons—to try to create a monopoly, albeit a small one in terms of the commercial market. That is the only way to secure the proper reward by price against the investment that has been put in. Of course, the market and consumers are always anxious for that not to happen. A prime example is the ready-mixed concrete industry, with which I am very familiar. There might be three ready-mixed concrete plants in towns in England, Wales, Scotland or Northern Ireland, each desperately trying to occupy the five-mile radius—much further, and the stuff would set in the back of lorry—and create some form of commanding market presence to justify itself. I am talking about radial monopolies. There was an incentive, at times—wholly to be condemned—to carve up the market. There have been court cases demonstrating that.
        This proposal is a way of derogating from the application of the recently introduced statutory requirements on competition, which I fully support—we shall wait to see how they work out in practice, having so recently been implemented. This is lineal monopoly behaviour. If we combine radial and lineal monopolies, this is a first in terms of the way in which competition and marketplace domination are defined.
        As I said, I welcome the Government's approach to quality partnerships, contracts and the need to address through routes and ticketing so that we can provide for all our constituents a proper public service recognition, while at the same time encouraging the investment that follows a proper commercial base for bus services. I was concerned, however, when the Minister referred to a special competition regime that can be used by local authorities. Would that one day extend to taxi services? Given the way in which the Post Office has harnessed some of the quasi-bus services, to what extent does that potential derogation apply? It is important to have that clarified.
        There is an element of wanting to have it both ways. The Government talk about joined-up government, but they are conscious that what the Department of Trade and Industry is producing is not quite so joined-up, as far as the Bill is concerned, as they might like.
        Directors face enormous difficulties and anxieties if they are accused of anti-competitive behaviour under increasingly rigorous statutory requirements. I fully
        792
        understand the derogation that is sought, and the way in which the Government want to test it through the new schedule. However, I am not reassured, given where such provisions might lead in other areas of commercial activity, and I look to the Minister for reassurance. There is a special public interest provision in the new schedule. Many areas, as well as buses and trains, might be considered a special public interest. For instance, if the Ministry of Defence commissioned a new structure for its service, that would clearly be in the public interest. When it comes to the ready-mixed concrete to be supplied, under this potential precedent, would the Competition Act 1998, implemented on 1 March this year, be prayed in aid in order to seek a derogation?
        Of course, I am postulating. This is hypothetical. It is none the less important, not least because I do not claim to be an expert in this field, other than through experience. However, we all know that an army of lawyers is out there, ready to charge horrendous fees for giving advice. That is a major cost on businesses, which feeds through to the consumer. Therefore, we have an interest in seeking to bring forward relevant and appropriate legislation.
        My concern is that this provision—even though it is well intentioned—could be prayed in aid and used as a precedent in relation to unforeseen activities in other commercial marketplaces. I worry that it would undermine the 1998 Act and measures introduced by another Department.
        11.30 pm
        Mr. Peter Snape: I declare an interest: I am the chairman of a bus company—Travel West Midlands, part of the National Express group.
        The hon. Member for Eddisbury (Mr. O'Brien) must forgive me for not following him down the interesting path that he took. The Standing Committee might have benefited from his expertise; our proceedings would have been considerably enlivened by a debate on the difference between a radial and a linear monopoly. The hon. Member for Bath (Mr. Foster) and I would have immediately bowed out of that discussion on the grounds of lack of technical knowledge.
        However, the hon. Member for Eddisbury made a relevant point on a matter that gave rise to much debate in Committee—as the hon. Member for Bath pointed out. The fundamental problem is that competition and integration do not make easy bedfellows. Although we all applaud the Government's intention of trying to integrate transport services in general and bus services in particular, it would be all too easy—as the hon. Member for Eddisbury reminds us—for that intention to fall foul of the Competition Act 1998.
        That point deserves the attention of my hon. Friend the Under-Secretary of State for the Environment, Transport and the Regions, and I know that he will approach it with his customary courtesy and diligence. We need to know exactly where bus companies and local authorities stand vis-a-vis the 1998 Act, if we are to achieve the genuine integration that the Government want.
        I suspect that the Conservatives are quite relaxed about that matter these days. The hon. Member for Poole (Mr. Syms), who spoke for the Opposition, was certainly extremely relaxed on the matter in Committee—as he was this evening.

        793
        When we discussed in Committee co-operation between local authorities and bus companies, I pointed out that we all want such voluntary agreements to be established and to work. The bus industry as a whole did not want fares and frequencies—for example—to become part of any statutory partnership. The industry feels that such fundamental matters, which have a direct, bottom-line impact, are best decided by the companies, although they—especially my own company—would seek agreement with the relevant local authority.
        However, we need some reassurance that, having sought such agreement, we should not be hauled off to the authorities under the Competition Act. As the hon. Member for Eddisbury reminds us, the penalties faced by directors are—rightly—somewhat draconian. I declare another interest: I have no particular desire to be dragged off and arraigned if we came to a voluntary agreement with the local authorities and it fell foul of the Act. The question is relevant and well worth debate.
        Furthermore, if my hon. Friend the Under-Secretary can answer that other question—on the difference between a linear and a radial monopoly—the House will be grateful to him. If we had held such a debate in Committee, not only might our deliberations have been enlivened, but our knowledge of such matters would have been considerably enhanced by the guidance of the hon. Member for Eddisbury on what is, I am sure, an enormously important difference—albeit one that I have never heard put to the test. From my long experience of working with my hon. Friend, I know that he is extraordinarily well educated, so he is in a better position than any other Member here to answer that vital question.
        Mr. Peter Luff: I have no interest to declare except to say that, for three happy years from 1982 to 1985, I advised the Confederation of British Road Passenger Transport, which subsequently became known as the Bus and Coach Council. At that time, we agonised about many of the issues that have been debated tonight.
        I shall speak to new schedule 1 and amendment No. 306. I listened carefully to the Minister's remarks, but I did not hear him address amendment No. 306. If he did and I missed it, I apologise to him. The amendment inevitably caught my eye because it would amend section 63(7) of the Transport Act 1985 by replacing the words from "so to conduct" to the end of the subsection with the words
        to have regard to a combination of economy, efficiency and effectiveness.
        I thought that our whole political lives were designed to have regard to
        a combination of economy, efficiency and effectiveness
        so the amendment is motherhood and apple pie written into statute law. I can think of many clichés with which one would wish to amend Acts of Parliament. Will the Minister explain exactly what the amendment will do? It looks splendid, impossible to argue with—and therefore, I am afraid, profoundly suspicious.
        My hon. Friend the Member for Poole (Mr. Syms) was charitable to the Government about new schedule 1. It is longer than many Acts of Parliament; it is a huge
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        provision that contains many fascinating and surprising ideas. They are not necessarily wrong, but they are surprising.
        Paragraph 16(1) of the new schedule states:
        The Director may charge fees in connection with the exercise by him of any of his functions under this Schedule.
        What are those fees and how much will they involve?
        My hon. Friend's points were germane. What consultation has taken place? Why does paragraph 15 give the Director General of Fair Trading such an absolute defence on defamation? That provision appears to be very generous. Why does paragraph 9 exempt information
        made for the purpose of facilitating the performance of any function of the European Commission in respect of Community law about competition?
        That is extraordinary enough, but why does paragraph 4 need to spell it out. It says:
        In determining an application made under paragraph 3, the Director must take into account any representations made to him about the application.
        I thought that he would always take into account such representations. It is a long and complex new schedule.
        Mr. Peter Atkinson: Has my hon. Friend seen paragraph 13 of the new schedule, which gives the director general the extraordinary power to take an authority that fails to comply with his orders "without reasonable excuse"—whatever that may mean—to the High Court? Presumably, if the authority fails to appear, it could be in contempt of the High Court. That is draconian at the very least.
        Mr. Luff: I agree strongly with my hon. Friend. The new schedule may meet with the approval of the industry, local authorities and all those involved, but it is an exceptionally long schedule to put into an exceptionally long Bill at this late stage. The Minister will need to reassure us that the consultations that I hope he has had with those who will be affected by the new schedule have produced a favourable result.
        Mr. Hill: I take it that there are no more bidders in the debate.
        I express my gratitude to the hon. Member for Poole (Mr. Syms) for his warm welcome for new clause 14 and to the official spokesman for the Liberal Democrats, the hon. Member for Bath (Mr. Foster), for what was, I suspect, his slightly less warm welcome. All the offers made were appreciated.
        The hon. Member for Poole asked two questions. First, he asked about consultation with bus operators and local authorities. The new clause and the amendments will do what we said in Committee that they would do. It goes without saying that we keep in touch with the bus industry and local government. I was careful to explain our intentions at some length in Committee, so that the industry and local authorities could make representations if they so wished. We have certainly explained our intentions to the bus industry.
        The hon. Gentleman also pressed me on the issue of fees for applications for decisions on the new competition test. Paragraph 16 of the new schedule gives the director general a power to charge fees in connection with the exercise of any of his new powers. That would include,

        795
        for example, a fee for an application made to him under paragraph 3 of the schedule about whether the new competition test was met in any given case. The schedule contains no special procedure for setting fees. Any fees charged will be at the director general's discretion, and it will be open to him to choose not to set a fee in particular cases if he considers it appropriate.
        I turn now to the remarks of the hon. Member for Mid-Worcestershire (Mr. Luff). I nearly called him the hon. Member for Wyre Piddle because of his proper obsession with that place—I shall return to the issue of obsessions later. He also referred to fees set by the director general. I imagine that they would be set at a level that takes into account the resources involved in determining a particular case. He made one or two suggestions and complained about the length of the new schedule. We have tried to make it as comprehensive as possible, and we are being damned for its length, but I dare say that if it had been short, we would have been damned for its brevity. I shall, in due course, return to other points made by the hon. Gentleman.
        The hon. Member for Bath raised the status of fare and frequency arrangements that are not included in the quality partnerships. In Committee, we took to describing those arrangements as non-statutory codicils to quality partnerships. This point was also raised by my hon. Friend, and guru, the Member for West Bromwich, East (Mr. Snape). The hon. Member for Bath is correct: the new schedule does not apply to non-statutory agreements. The position is as I have stated it before, but I know that the Office of Fair Trading is always willing to talk constructively to anybody who wants to put proposals to it. It is not for me to speculate on particular cases.
        I fear that the hon. Gentleman also mentioned quality partnership arrangements in connection with tour buses. I thought that we would be lucky if we got through the proceedings without a reference to tour buses or Eurocontrol. We have heard enough of both, particularly the latter, this evening. I say to the hon. Gentleman and his local authority of Bath and North East Somerset that we should remember that many non-statutory quality partnerships have already been successfully established, and the OFT has not objected. The track record is by no means completely unhappy. If Bath and North East Somerset council is in doubt, I offer it the advice, via the hon. Gentleman, that the OFT is always ready to talk.
        Mr. Don Foster: The Minister is being helpful, but the point is that in new schedule 1 the Government argue that it must be demonstrated that non-statutory partnerships would secure benefits to the service users, and reduce or limit congestion and noise or air pollution. If similar benefits accrue from a non-statutory quality partnership, does the Minister expect that the OFT will be likely to approve such an arrangement?
        11.45 pm
        Mr. Hill: I understand the thrust of the hon. Gentleman's point, but I have to tell him that it is not appropriate for me to speculate at the Dispatch Box on a matter of that nature. It is a sensitive matter and Ministers have to be wary; it is certainly not a subject that I intend to explore, especially at this late stage in our proceedings.
        The hon. Member for Eddisbury, who is indeed a most prolific correspondent on behalf of his constituents, warned of the dangers and temptations of monopolies,
        796
        both linear and radial. As he acknowledged, the new clause is designed to enable us to strike a delicate balance between best value in transport provision and competition requirements. Again, it is not for me to speculate about the extent to which these provisions might act as a precedent for other arrangements. At one point, he spoke about the Ministry of Defence and about poured concrete—a subject of which I confess complete ignorance.
        The hon. Gentleman asked whether the special competition regime would apply to taxi services. The short answer is no; the new clause is solely about buses. The slightly longer answer is that in certain circumstances, a taxi can run as a bus service; however, I shall spare the hon. Gentleman an exposition of taxi law—a subject of immense complexity with which I have to wrestle constantly. The amendment is deliberately designed to address bus issues alone, and I make no apology for its exclusivity, even in respect of ready-mixed concrete. I do not accept that the proposals pose any threat to the Competition Act 1998.
        My hon. Friend the Member for West Bromwich, East raised the question of agreements between companies. As I have said, the most important thing is to consult the OFT. The key issue is the consumer: in consumers' interests, the OFT—indeed, all of us—should be wary of cosy deals between operators, which might be to their advantage and not to that of passengers. I am sure that my hon. Friend would not countenance such deals, but we must not forget the possibility of their arising and we must always remember that the consumer has priority.
        Mr. Snape: Will my hon. Friend not utter a word of encouragement? I understand the dilemma in which he finds himself: on the one hand, the Government want to encourage local authorities and bus operators to come to voluntary agreements; on the other hand, he appears to want to wash his hands of the consequences of such agreements. However, what about saying to the OFT that such agreements should be encouraged, if they are in the interests of the consumer? If no such action is taken, bus companies are likely not to bother with such agreements, lest they become mired in difficulties.
        Mr. Hill: It is not unreasonable to suggest that the bus companies might take an initiative in the matter. Having said that, I am sure that those in the OFT will read very carefully my hon. Friend's remarks in Hansard and reflect on them.
        Mr. Don Foster: The hon. Member for West Bromwich, East (Mr. Snape) has got the Minister on the ropes. The Minister must respond to him. It cannot be right for the Minister to ask the House to support him, please, in the amendments that get round the Competition Act because, by referring to statutory quality partnerships and quality contracts, they will ensure benefits for service users and will limit congestion, noise or air pollution, yet when people want to do so on a voluntary, non-statutory basis, for him to say, "It's nothing to do with me, Guy. That is dangerous territory; I shouldn't enter into it." Why should he not enter such territory?
        Mr. Hill: I am reminded of my oft-quoted remark that there is nothing more deadly than the friendly intervention. I shall not be tempted along that path.

        797
        We should not forget that the Competition Act has a public interest provision—if I can call it that—albeit in more general, less tailor-made terms than the proposed new schedule. Section 9 is an example.
        Mr. Jenkin: Will the Minister give way?
        Mr. Hill: Aha—the hon. Gentleman, who is not notorious for his interest in bus matters, obviously spots a potential vulnerability and leaps to his feet.
        Mr. Jenkin: I am most interested in these bus matters.
        I just wanted to inquire, on an entirely friendly basis, how happy the Minister's colleagues at the Department of Trade and Industry are with the proposed arrangements.
        Mr. Hill: That is an easy one. I am most grateful to the hon. Gentleman for a genuinely friendly intervention. I assure him that these novel and important provisions have been drawn up in complete consultation and collaboration with the DTI, which is entirely happy with them.
        I hasten on to deal with the points raised by the hon. Member for Mid-Worcestershire. He talked about special provisions in what he complained was a long and complex new schedule, but the powers in the new schedule are less dramatic than they seem. It is a matter simply of getting the procedures right; they have precedents. The OFT needs fall-back powers in the event of people obstructing it, but we very much doubt whether they will be needed. We hope that they will not, but it is right for legislation to cover a wide range of circumstances. There is protection, for example, for commercially sensitive information in paragraphs (8) and (9).
        The hon. Member for Mid-Worcestershire referred to amendment No. 306. Although I mentioned it in my opening remarks, I can imagine that the general interest in my speech was so intense that he did not entirely pick up my comments. Amendments Nos. 305 and 306 ensure consistency with clause 131(2). Amendment No. 306 introduces the best value test of economy, efficiency and effectiveness, which reads across to the generality of local government legislation. It offers alternative wording to the phrase "not to inhibit competition" in the Transport Act 1985, which is felt to be less helpful than the new formulation. It essentially links current thinking about the criteria that ought to be adopted by local authorities in their policies. With that very comprehensive response to the debate, I commend the new clause to the House
        Question put and agreed to.
        Clause read a Second time, and added to the Bill.

      New Clause 8

        POWER TO OBTAIN INFORMATION ABOUT LOCAL SERVICES
        '.—(1) A local transport authority may, in connection with the exercise of any of its functions relating to public transport, require an operator of local services to provide it with any information relating to the matters specified in subsection (2) which is in his possession or control.
        (2) The matters referred to in subsection (1) are—?

        (a) the total number of journeys undertaken by passengers on the local services operated by the operator in the authority's area or any part of its area,

        798

        (b) the structure of fares for those journeys, and

        (c) the total distance covered by vehicles used by him in operating those local services.

        (3) The operator may be required to provide the information in any form in which, having regard to the manner in which the information is kept, it is reasonable to expect him to provide it.
        (4) No information which—

        (a) has been provided under this section, or provided together with information so provided, and

        (b) relates to the affairs of an individual or to a particular business,

        shall be disclosed during the lifetime of the individual or while the business continues to be carried on.
        (5) But subsection (4) does not apply to a disclosure made—

        (a) with the consent of the individual or the person for the time being carrying on the business,

        (b) in connection with the investigation of crime or for the purposes of criminal proceedings,

        (c) for the purposes of civil proceedings brought by virtue of this Act or the Transport Act 1985, or

        (d) in order to comply with the order of a court or tribunal.

        (6) A person who discloses information in contravention of subsection (4) is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.'.—[Mr. Hill.]
        Brought up, and read the First time.
        Mr. Hill: I beg to move, That the clause be read a Second time.
        The new clause was tabled in response to a matter that we discussed in Committee on 17 February on a Liberal Democrat amendment aimed at allowing access by local authorities to reasonable statistical information held by bus operators. We expressed sympathy with the aims of the amendment and undertook to introduce a suitably worded new clause, which I am happy to do.
        The new clause should meet all the points raised in Committee. It will give a local transport authority, in the exercise of any of its public transport functions, power to require bus operators to supply information that they hold. The information may relate to passenger journeys, bus mileage and fare structures in respect of journeys throughout the area or part of the area. It may be requested in any form, subject to a test of reasonableness, and it may not be disclosed, other than with consent or in connection with civil or criminal proceedings, contravention being subject to a fine of up to level 5 on the standard scale.
        I hope that the House will agree that the new clause is a welcome improvement to the Bill. It will ensure that authorities, in support of their functions relating to local transport plans and bus strategies, but also more generally—for example, in the context of reporting on bus services under the local government best value regime—have access to appropriate statistical information held by bus operators. It will also safeguard matters of commercial confidentiality.
        Mr. Michael Moore: I do not think that any of us had expected to reach the new clause, but after the Minister has so generously responded to serious concerns raised by Liberal Democrats in Committee, it would be churlish of us not to acknowledge the major steps forward that he has taken. The habit of the Committee was for members to

        799
        write home to their mother or wife on the occasion of such a minor triumph. We have had the pen ready and the postage stamp prepared, and we will send that letter off tonight.
        Question put and agreed to.
        Clause read a Second time, and added to the Bill.
        MR. DEPUTY SPEAKER then proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour

      New Clause 10

        VARIATIONS: SUPPLEMENTARY
        '.—(1) The relevant references to the authority or authorities in relation to a quality partnership scheme—

        (a) include a local transport authority if it has been varied so that it relates to that authority's area, but

        (b) do not include a local transport authority if it has been varied so that it no longer relates to that authority's area.

        (2) But if (although the scheme does not relate to a local transport authority's area) it would do by reason of a proposed variation, those references (apart from those in section 101) include that authority.
        (3) The relevant references (apart from that in section 97(1)) to the authority or authorities in relation to a quality partnership scheme—

        (a) include a traffic regulation authority if it has been varied so that it specifies traffic regulation facilities, but

        (b) do not include a traffic regulation authority if it has been varied so that it no longer specifies such facilities.

        (4) But if (although the scheme does not specify facilities which are traffic regulation facilities in relation to a traffic regulation authority) it would do by reason of a proposed variation, those references (apart from those in section 101) include that authority.
        (5) And if (although the scheme specifies facilities which are traffic regulation facilities in relation to a traffic regulation authority)—

        (a) the traffic regulation order, or (where more than one) each of the traffic regulation orders, required to be made by that authority for the provision of those facilities has been revoked, and

        (b) the scheme is proposed to be varied (but not so that it specifies other facilities which are traffic regulation facilities in relation to that authority),

        the relevant references (apart from those in section 101) do not include that authority.
        (6) For the purposes of this section the relevant references are those in—

        (a) section 97(1) to (3),

        (b) sections 98 to 102, and

        (c) section 108(5B),

        and paragraph 27(3) of Schedule 9 to the Road Traffic Regulation Act 1984.
        (7) In this section "traffic regulation authority" means—

        (a) a metropolitan district council,

        (b) the Secretary of State, or

        (c) the National Assembly for Wales.

        (8) For the purposes of this section facilities are traffic regulation facilities, in relation to a traffic regulation authority and a quality partnership scheme, if that authority was required to be a maker of the scheme because it originally specified those facilities or would have been required to be a maker of it had it done so.'.—[Mr. Robert Ainsworth.]
        Brought up, read the First and Second time, and added to the Bill.

      New Clause 9

        PLANS AND STRATEGIES: SUPPLEMENTARY
        '.—(1) In carrying out their functions under sections 92 to 95, a local transport authority must have regard to any guidance concerning—

        (a) the content of local transport plans (and bus strategies),

        (b) the preparation of such plans (and strategies),

        (c) the alteration and replacement of such plans (and strategies), and

        (d) the publication and making available of such plans (and strategies) as originally made and as altered or replaced,

        which is issued from time to time by the Secretary of State (as respects England) or the National Assembly for Wales (as respects Wales).
        (2) In developing their policies under section 92(1) and their bus strategy, a local transport authority must have regard to the transport needs of persons who are elderly or have mobility problems.'.—[Mr. Robert Ainsworth.]
        Brought up, read the First and Second time, and added to the Bill.

      Clause 93

        FURTHER PROVISION ABOUT PLANS
        Amendments made: No. 149, in page 56, line 29, leave out—
        '(their "current local transport plan")'.
        No. 150, in page 56, line 34, leave out "subsection (5)" and insert—
        'section (Plans and strategies: supplementary)(1)'.
        No. 151, in page 56, line 37, leave out "current".
        No. 152, in page 56, line 45, at end insert—
        '(4A) Where a local transport authority have, before the coming into force of section 92, prepared and published a document which

        (a) contains policies developed by them for the purposes described in subsection (1)(a) of that section, and

        (b) was prepared and published in accordance with guidance issued by the Secretary of State (as respects England) or the National Assembly for Wales (as respects Wales),

        that document shall be taken to be the authority's local transport plan.
        (4B) But, in the case of a document which is a local transport plan by virtue of subsection (4A), subsection (2) requires its replacement not later than—

        (a) 31st March 2006, if it relates to an area in England, or

        (b) such date as is specified in an order made by the National Assembly for Wales, if it relates to an area in Wales,

        (rather than not later than five years after the date on which it was made).'.
        No. 153, in page 57, line 1, leave out subsection (5).—[Mr. Robert Ainsworth.]

      Clause 94
        BUS STRATEGIES
        Amendment made: No. 154, in page 57, leave out lines 24 and 25.—[Mr. Robert Ainsworth.]
      Clause 95

        CONSULTATION AND PUBLICITY ABOUT BUS STRATEGIES
        Amendments made: No. 155, in page 57, line 38, leave out from beginning to "whose" in line 41 and insert—
        'any other relevant local authority'.
        No. 156, in page 58, line 5, at end insert—
        '( ) For the purpose of subsection (1)(a) the following are relevant local authorities—

        (a) local transport authorities,

        (b) metropolitan district councils,

        (c) London transport authorities, and

        (d) councils in Scotland;

        (except that, in the case of consultation by a Passenger Transport Authority for a passenger transport area, a council for a metropolitan district comprised in the area is not a relevant local authority).'.
        No. 157, in page 58, line 7, leave out "(their "current bus strategy")".—[Mr. Robert Ainsworth.]

      Clause 96

        ROLE OF METROPOLITAN DISTRICT COUNCILS
        Amendments made: No. 158, in page 58, line 17, leave out "and (5) and 94(3)" and insert—
        ', 94(3) and (Plans and strategies: supplementary)'.
        No. 159, in page 58, line 19, at end insert—
        '( ) Section 93(4A) applies in the case of a Passenger Transport Authority for a passenger transport area only if the document to which it refers has been prepared and published by—

        (a) that Authority, and

        (b) the councils for the metropolitan districts comprised in the area,

        acting jointly.'.—[Mr. Robert Ainsworth.]

      Clause 97

        QUALITY PARTNERSHIP SCHEMES
        Amendments made: No. 160, in page 58, line 24, leave out "current".
        No. 301, in page 58, line 28, after "limit" insert "traffic congestion,".
        No. 161, in page 59, line 7, at end insert—
        '(other than a road for which the Secretary of State or the National Assembly for Wales is the traffic authority)'.
        No. 162, in page 59, line 8, leave out "must be" and insert—
        'may not be made unless it is'.
        No. 163, in page 59, line 9, at end insert—
        '(6A) If the provision of any of the facilities requires the making of a traffic regulation order in respect of a road for which the Secretary of State or the National Assembly for Wales is the traffic authority, the scheme may not be made unless it is made by—

        (a) the local transport authority or authorities, and

        (b) the Secretary of State or the National Assembly for Wales,

        acting jointly.
        (6B) Where subsection (6) or (6A) applies so that a metropolitan district council, the Secretary of State or the National Assembly for Wales is a maker of the scheme, then (subject to section 102(7)(b) and (9)) the relevant references to the authority or authorities include (as well as the local transport authority or authorities) the metropolitan district council, the Secretary of State or the National Assembly for Wales.
        (6C) For the purposes of subsection (6B) the relevant references are—

        (a) subsections (2) and (3),

        (b) sections 98 to 102, and

        (c) section I08(5B),

        and paragraph 27(3) of Schedule 9 to the Road Traffic Regulation Act 1984.'.
        No. 164, in page 59, line 15, after "another" insert "such".—[Mr. Robert Ainsworth.]

      Clause 98

        NOTICE AND CONSULTATION REQUIREMENTS
        Amendments made: No. 165, in page 59, line 21, leave out subsection (3).
        No. 166, in page 59, line 31, leave out from beginning to second "any" in line 32 and insert—
        'any other relevant local authority'.
        No. 167, in page 59, line 38, at end insert—
        '( ) For the purpose of subsection (4)(c) the following are relevant local authorities—

        (a) local transport authorities,

        (b) metropolitan district councils,

        (c) London transport authorities, and

        (d) councils in Scotland.'.—[Mr. Robert Ainsworth.]

      Clause 101

        EFFECT OF SCHEME
        Amendments made: No. 168, in page 61, line 12, at end insert—
        '( ) Nor does it apply in the case of the Secretary of State or the National Assembly for Wales if he or it is unable to provide the facilities owing to the variation or revocation of a traffic regulation order.'.
        No. 169, in page 61, line 13, leave out subsection (3).—[Mr. Robert Ainsworth.]

      Clause 102

        VARIATION OR REVOCATION OF SCHEME
        Amendments made: No. 170, in page 61, line 36, leave out "only".
        No. 171, in page 61, line 39, leave out "termination" and insert "revocation of the scheme".
        No. 172, in page 61, line 41, after "scheme" insert "under subsection (1)".
        No. 173, in page 61, line 44, leave out—
        'or the revocation of a scheme'
        and insert—
        'under subsection (1), or the revocation of a scheme under subsection (2),'.—[Mr. Robert Ainsworth.]

      Clause 105

        QUALITY CONTRACTS SCHEMES
        Amendments made: No. 174, in page 62, line 34, leave out "current".
        No. 404, in page 63, line 9 leave out "exclusive".—[Mr. Robert Ainsworth.]

      Clause 106

        NOTICE AND CONSULTATION REQUIREMENTS
        Amendments made: No. 175, in page 64, line 1, leave out from beginning to "any" in line 2 and insert—
        'any other relevant local authority'.
        No. 176, in page 64, line 8, at end insert—
        '( ) For the purpose of subsection (3)(d) the following are relevant local authorities—

        (a) local transport authorities,

        (b) district councils in England,

        (c) London transport authorities, and

        (d) councils in Scotland.'.—[Mir. Robert Ainsworth.]

      Clause 107

        APPROVAL OF PROPOSED SCHEME
        Amendments made: No. 177, in page 64, line 18, leave out from beginning to "may" in line 19 and insert—
        'Any person consulted under section 106(3)'.
        No. 178, in page 64, line 34, leave out—
        'as proposed under subsection (1)'
        and insert "without modifications".—[Mr. Robert Ainsworth.]

      Clause 108

        MAKING OF A SCHEME
        Amendment made: No. 179, in page 65, line 12, at end insert—
        '(5A) The scheme may include provision—

        (a) varying or revoking any quality partnership scheme which only relates to the area of the authority, or combined area of the authorities, by which the scheme is made, or

        (b) varying any other quality partnership scheme to the extent that it so relates.

        (5B) If provision is made under subsection (5A)(b) to vary the quality partnership scheme so that it no longer so relates, such of the authorities by which it was made as did not make the quality contracts scheme—

        (a) may (subject to the provision so made) vary it if they decide that it is appropriate to do so, or

        (b) may revoke it if all persons who have given an undertaking to provide a service to a standard specified in the scheme consent to the revocation of the scheme (which consent must not be unreasonably withheld);

        and subsections (3) and (4) of section 102 apply to a variation or revocation under this subsection.'.—[Mr. Robert Ainsworth.]

      Clause 111
        TENDERING FOR QUALITY CONTRACTS
        Amendment made: No. 180, in page 66, line 27, leave out from "years" to end of line 29.—[Mr. Robert Ainsworth.]
      Clause 113

        VARIATION OR REVOCATION OF SCHEME
        Amendments made: No. 181, in page 67, line 43, after "scheme" insert—
        '(other than any to whose area the scheme no longer relates)'.
        No. 182, in page 68, line 1, at end insert—
        'or

        (c) providing for new exclusions from the scheme or for the variation or revocation of existing exclusions.'.

        No. 183, in page 68, line 9, after "authorities" insert—
        'who made the scheme (other than any to whose area the scheme no longer relates)'.
        No. 184, in page 68, line 19, at end insert—
        'and section 111 applies to a varied scheme but subject to regulations so made.'.—[Mr. Robert Ainsworth.]

      Clause 116
        JOINT AND THROUGH TICKETING SCHEMES FOR BUSES
        Amendment made: No. 185, in page 69, line 22, leave out "current".—[Mr. Robert Ainsworth.]
      Clause 117
        NOTICE AND CONSULTATION REQUIREMENTS
        Amendment made: No. 302, in page 70, line 1, leave out "introduce" and insert "make".—[Mr. Robert Ainsworth.]
      Clause 118

        MAKING OF SCHEME
        Amendment made: No. 303, in page 70, line 32, at end insert—
        '(5) The authority or authorities may vary or revoke the scheme; and the variation or revocation is subject to the same procedure as the making of the scheme, except to the extent that that procedure is modified by regulations made by the appropriate national authority.'.—[Mr. Robert Ainsworth.]

      Clause 120
        INFORMATION ABOUT BUS SERVICES
        Amendment made: No. 186, in page 70, line 38, leave out "current".—[Mr. Robert Ainsworth.]
      Clause 124

        MANDATORY CONCESSIONS OUTSIDE GREATER LONDON
        Mr. Jenkin: I beg to move amendment No. 300, in page 72, line 33, at end insert—
        'or that he will receive discretionary travel concessions which are at least equivalent to the concessions provided for under subsection (1).'.
        Mr. Deputy Speaker: With this it will be convenient to discuss the following: Amendment No. 146, in clause 125, page 72, line 43, leave out from "attained" to end of line 45 and insert—
        'the age of sixty years or over.'.
        Government amendments Nos. 187 and 188.
        Mr. Jenkin: At this late hour, I shall explain the purpose of amendment No. 300, which amends clause 124(3). The clause contains the necessary technical definitions and regulation-making powers so that the price of the bus pass can be altered in a concessionary fares scheme.

        805
        Subsection (3) states:
        A person may agree with the travel concession authority that he is not entitled to be provided with concessions under subsection (1) for a period in return for being entitled during that period to receive travel concessions under a scheme under section 93 of the Transport Act 1985.
        I confess that I have not made a detailed study of section 93 of the Transport Act 1985, but the amendment would add to the end of clause 124 the words,
        or that he will receive discretionary travel concessions which are at least equivalent to the concessions provided for under subsection (1).
        12 midnight
        The amendment's importance is immediately apparent. When a person benefits from a non-statutory concessionary travel scheme, the local authority should be released from its obligation to provide that person with statutory concessions under the Bill. Groups of local transport authorities that offer non-statutory concessionary travel schemes, should not need to offer a statutory discretionary fare scheme under the Bill.
        I hope that the Minister realises that several transport authorities have made representations on the matter. I hope that he will accept the amendment or undertake to accept a similar amendment at a later stage.
        Mr. Moore: As the hon. Member for North Essex (Mr. Jenkin) said, the hour is late and the fluidity of our discussions is not what it might be, not least since our earlier exchange of acronyms.
        Amendment No. 146 strikes at the heart of major discrimination in the Bill on concessionary fare schemes. My hon. Friend the Member for Bath (Mr. Foster) believes that it would be unwise for him to speak about the amendment because he might have to declare an interest: under our proposal, he would qualify for a concessionary bus pass in 2007; under the Government's provisions, he would have to wait until 2012. As we get closer to 2007, the matter worries him greatly.
        Mr. Raynsford: When will the hon. Gentleman qualify?
        Mr. Moore: In my case, it does not matter which scheme is implemented. If I am spared, it will be a wee while before I qualify. [Interruption.] I am glad that my hon. Friend the Member for Bath has rejoined us to hear us fight the case for an earlier bus pass for him.
        In Committee, the Minister did not tackle the fundamental point and identify the reason for the discrimination. He hid behind the fact that pensions legislation refers to equalisation by 2020. That is a long time to wait, and many organisations, including Parity, Age Concern and the National Federation of Post Office and British Telecom Pensioners, fail to understand the reasons for the discrimination.
        The European courts, especially in the Atkins case, have failed to back the proposal that the amendment presents and have supported the Government's position. However, in case the Minister is tempted to hide behind that defence again, the Government won the case because the issue was further confused by others, not least young people, who were entitled to concessionary fares.
        806
        In Committee, the hon. Member for West Bromwich, East (Mr. Snape) tried to clarify the cost of the amendment. He is a diligent Member and he contributed greatly to those proceedings. In his own way, he hoped to back the broad principle that we support and said:
        I do not look forward to being issued with a bus pass, but it will at least qualify me as a pensioner to sit in the pub, twang my braces, bemoan the fate of modern society and comment on every subject under the sun.—[Official Report, Standing Committee E, 29 February 2000; c. 811.]
        We all denied that he was up to that already.
        Our amendment has broad cross-party support so we hope that the Minister has changed his mind in the weeks that he has had to consider it and sees fit to support us.
        Mr. Snape: I hope to follow the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) without repeating anything that I said in Committee, except that asked the Liberal party how much the proposal would cost. Answer came there none, and answer came there none tonight. I hate to inject a controversial note, but I voted against it, as did my hon. Friends, on the ground that it represented a dash of cheap populism—not that that is common, of course.
        Mr. David Taylor: It came from the Liberal party's vast store.
        Mr. Snape: My hon. Friend's sedentary comment is somewhat unkind. I am not sure how vast that store is, but that is how the proposal struck me. The Liberal party wrote to various people in various parts of the country, usually in constituencies represented by Liberals. They wrote to members of the Committee, me included—[Interruption.] The hon. Member for Bath (Mr. Foster) shakes his head and professes to know nothing about it, but of course he did that. I do not complain; that is politics.
        Most of the letters accusing me and other Labour members of the Committee of sex discrimination and refusing to allow elderly gentlemen to participate in a pensioner scheme—I almost fall into that category as the magic date is approaching—came from constituencies represented by Liberals. I have no objections as that is part of the rough and tumble and hurly-burly of politics, but I still want to know how much the proposal will cost. It is incumbent on the Liberal party, before engaging in cheap populism, to tell us—[Interruption.] I did not; I voted against. The Liberal party must tell us the cost.
        Mr. Don Foster: May I attempt to answer both the hon. Gentleman's points briefly? The hon. Member for Coventry, North-East (Mr. Ainsworth), who served as the Whip in Committee, was the first to express concern about the letters. I assured him, as I assure the hon. Gentleman, that although I wish that I had thought of writing such letters, another organisation—not my party—wrote them without our knowledge or agreement.
        The hon. Gentleman makes a fair point about cost, but it would be absolutely zero in the next 18 months. The Government, for the past three years, have made great play of their introduction of the concessionary fares scheme. However, that will not happen for another 18 months. As the cost of their proposed package is about £40 million, it is not unreasonable to suppose that

        807
        supporting our amendment represents a cost of about an additional £10 million. As that is so little, I am sure that he can support us.
        Mr. Snape: The cost is part of the magic penny that we have heard about. [Interruption.] In fact, it is a small part of it and we are grateful to the hon. Member for Bath for that clarification. However, I say to him and the hon. Member for Ettrick, Tweeddale and Lauderdale—
        Mr. Moore: Tweeddale, Ettrick and Lauderdale.
        Mr. Snape: I will get it right one of these days. If the hon. Gentlemen moved to my constituency—I should be glad to welcome them, although they would have to shed the false doctrines that they have followed for years—and waited until the legal retirement age, they would enjoy free bus and rail travel across the west midlands conurbation. I hazard a guess that that scheme, which was provided and maintained by Labour local authorities in the teeth of hostility from Conservative Governments over the years, is far more generous than those in Bath and Tweeddale, Ettrick and Lauderdale, or whatever that constituency is called.
        Before the Liberals go round the country stirring up discontent in such an appalling way and attack hon. Members who merely seek financial clarification of some of their more outrageous proposals, they should sit down with us and work out which parts of the country have the most generous pro-pensioner schemes. It will come as no surprise to them—it will certainly come as no surprise to the Conservative party—that the most generous schemes are in areas that have been controlled by Labour for many years. [Interruption.] That includes areas that were involved in what happened last Thursday.
        Regardless of what happened then, we are talking about places that are still controlled by the Labour party. We are proud of the way in which we looked after pensioners and gave them travel facilities, and we will take no lessons from the Liberals. Unless the Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Streatham (Mr. Hill), who keeps describing me as his guru—after my last intervention, I am not sure whether I still qualify for that title—has a spare ten million in his back pocket, I suggest he tell the Liberals to get lost and stop indulging in the populism that they love so much, especially at this time of night.
        Mrs. Eleanor Laing: The hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) spoke of a certain type of discrimination. Although I do not agree with what he said, I see the point that he was making; but I want the Minister to clarify the position relating to a different type of discrimination involving concessionary fares.
        Clause 124(1)(a) makes it clear—although I appreciate that there has been no argument about this tonight—that eligible journeys are those between places in a particular travel concession authority area. That is a reasonable point, but I want to ask the Minister about his attitude to people who are in the position of my constituents who live on the edge of greater London. The area referred to, for their purposes, will be Epping Forest or, perhaps, Essex, but not Greater London.
        808
        It so happens that most of my constituents who live on the London-Essex border find themselves in an inequitable position. No, iniquitous. Well, an unfair position. [Laughter.] It is awfully late; "inequitable" will do.
        I know of a case in which the border between Essex and London falls in the middle of a semi-detached house. The pensioner living on one side of the border receives concessionary fares, while the one living on the other side does not. The pensioner who does not receive the concessionary fares is the fortunate one, benefiting—owing to living in my constituency in Essex—from all that Epping Forest district council and Essex county council can provide. I appreciate that the responsibility falls on the local authority as well as the Government to arrange these matters, but I ask the Minister to tell us how the Government view the inevitable unfairness.
        I have received many letters from constituents. In their 1998 White Paper "New Deal for Transport: Better for Everyone", the Government announced:
        We will introduce a national minimum standard for local authority concessionary fare schemes".
        Only a few months ago, the Deputy Prime Minister made an announcement to the House—in his last transport statement: the one that did not really say anything that he had not said before—that gave the distinct impression that the Government would fund concessionary fares. Pensioners in my constituency who do not benefit from concessionary fares were extremely pleased about that, and wrote to me in droves saying how wonderful the Deputy Prime Minister was to do this. [Interruption.] The hon. Member for Bath (Mr. Foster) says "Vote Labour". I am glad to say that last week people did not do so. It is clear why they did not, and I will tell him why. [Interruption.] I am sorry. I thought that it was the hon. Member for Bath who said "Vote Labour". Anyway, a Liberal Democrat Member said it. It is a slight change from last week, when Labour Members said "Vote Liberal". Of course, we are becoming used to that: we understand the anti-Conservative alliance, and the reason for it.
        12.15 am
        I will not stray from the point, despite the lateness of the hour. I ask the Minister to confirm that my constituents have been misled in thinking that the Government were going to fund their concessionary fares. The Deputy Prime Minister got a lot of credit for what he said but he did not mean it. He wanted my constituents to believe that they would benefit considerably from concessionary fares. It now appears that they will not do so. It is a genuine question. I ask the Minister to comment on it.
        Mr. Peter Atkinson: At this late hour and briefly, may I press the Minister on the unanswered question that was left over from the Committee when we dealt with concessionary fares: what happens to those authorities that have a token scheme? All this relates to bus or rail travel and to half-priced concessionary fares, but nothing has been said about people such as my constituents who have no access to bus or rail travel.
        My local authority, properly, operates a token system because that is fair to all pensioners, regardless of whether they have access to bus or train travel. Many pensioners

        809
        in country areas who cannot travel by bus save their tokens and then take taxis to and from the shops because that is the only way that they can travel.
        What the Government propose, with money to be put into the scheme for half-price travel, leaves such other schemes high and dry. The Minister said nothing in Committee about what will happen, who will fund those other schemes and how a token scheme will be funded once the new scheme comes in. I hope that, in the last minutes of our debate, he might be able to answer the question that has been troubling pensioners in my constituency.
        Mr. Hill: I shall deal first with amendment No. 300. I fear that we find it technically rather strange. Clause 124(3) already provides—I hope clearly—for an individual elderly person to opt for an alternative that the local authority might provide, rather than the statutory minimum. We included that provision because we entirely recognised that some local authorities run schemes based on tokens—exactly the point that the hon. Member for Hexham (Mr. Atkinson)—
        Mr. Jenkin: Will the Minister give way?
        Mr. Hill: Let me at least tell the hon. Gentleman why we find it a strange amendment and then he can intervene.
        We were aware that some local authorities, as the hon. Member for Hexham has pointed out, run schemes based on tokens, which may be used on taxis as well as on buses. Such schemes may be particularly valued by elderly people, even if they do not technically conform with the statutory minimum.
        Mr. Jenkin: My amendment provides for someone who uses a scheme that is provided not by their own transport authority—their local authority—but by a consortium of transport authorities, or a passenger transport authority.
        Mr. Hill: Let me continue with my explanation of the difficulties that the Government have with the amendment.
        To add a provision for an elderly person to be able to opt for an "equivalent" scheme seems to add nothing to the clause. Indeed, the amendment brings in a problem: who is to decide what is "equivalent"? That seems a strange and difficult judgment. It would not be fair to anyone for the Bill to impose the task on them—although another problem with the amendment is that it is silent on who is to decide equivalence. The statutory minimum is what the Bill says it is. The clause allows an individual to opt for an alternative if they prefer it. That seems to provide all reasonable flexibility. Therefore, I do not feel able to accept the amendment.
        Amendment No. 146 would equalise the age at which men and women become eligible for concessionary fares. Currently, eligibility is tied to pensionable age, with women qualifying for the state pension at 60, while men have to wait until 65. The hon. Member for—I am delighted to have the opportunity to pronounce this wonderful constituency name—Tweeddale, Ettrick and Lauderdale (Mr. Moore) has expressed very well the view
        810
        that the age at which people qualify for concessionary fares should be the same for men and for women, and that the common age should be 60, not 65. I certainly acknowledge that view.
        I have to say, however, as I said repeatedly in Committee, that I believe that there is another view. It seems to me that it is not unreasonable that the age at which one becomes eligible for financial benefit in the form of a pension should be the same as the age at which one becomes eligible for financial benefit in the form of reduced bus fares. That raises the further issue of whether it is right for that age to be different between men and women. Again, however, I have to give the same reply that I gave in Committee: the issue has been addressed by Parliament, and legislation has already been passed to equalise the two ages.
        Mr. Don Foster: It is the same speech.
        Mr. Hill: If the hon. Gentleman protests that that is word for word what I said before, let me add a different word. If the hon. Member for Tweeddale, Ettrick and Lauderdale really profoundly disagrees with the proposition that a bus pass should be available at the same time as other benefits to senior citizens, it is up to him and other Liberal Democrat Members to seek to introduce other legislation to equalise—
        Mr. Foster: That is what my hon. Friend is trying to do.
        Mr. Hill: No; Liberal Democrats should introduce a general provision. We are talking about provisions that would apply across the board and not simply to the exceptional case of bus passes, and equalisation of the two ages would have to be done in primary legislation. The Government stand by the fact that the Pensions Act 1995 states quite clearly that the common age for men and women alike will be 65, and that that will be phased in in 2010 and 2020. In the light of that legislation, I really do not feel that I am able to accept amendment No. 143.
        I should deal with the issues raised by the hon. Member for Epping Forest (Mrs. Laing), who dwells on the edge of London. The concessionary fare laws have always been based on the principle of local authority discretion. I am not persuaded that that is so wrong. Local authorities are best placed to take decisions on local transport.
        The hon. Lady also raised the funding issue. We have certainly said that local government will be reimbursed by us for the costs of the statutory minimum.
        I am afraid that that is all rather bad news for Opposition Members.
        Mrs. Laing rose—
        Mr. Hill: However, I have glad tidings for the House: I shall give way to the hon. Lady.
        Mrs. Laing: I thank the Minister very much for giving way, and for answering my question directly. The point, however, is that the Deputy Prime Minister has given the impression to my constituents that concessionary fares would be funded by the Government. Can the Minister

        811
        tell my constituents that the Deputy Prime Minister definitely gave them the wrong impression, and that there will be no funding from the Government?
        Mr. Hill: The idea of my right hon. Friend the Deputy Prime Minister giving the wrong impression is, of course, a contradiction in terms. He did not do so. Moreover, the fact is that the Government are funding the concessionary bus scheme at half the level of bus fares, and we mean to go further.
        Amendments Nos. 187 and 188 make our proposals for the statutory minimum standard scheme more generous, and will make it more widely available to those who can least afford to travel. The amendments propose that the travel pass for the half-fare scheme on local buses will be free of charge instead of having a maximum charge of £5, as in our original proposal. We estimate that an extra 2.2 million pensioners will benefit from the change. The extra cost is estimated at £14 million, and that sum will be added to the revenue support grant available to local authorities on the same basis as the cost of the original half-fare proposal. That constructive change shows our continued commitment to an inclusive society and to making travel opportunities more widely available. I commend it to the House.
        Mr. Jenkin: I was expecting an intervention from the hon. Member for West Bromwich, East (Mr. Snape), accusing the Minister of cheap populism. It would have been churlish for him to do so, but it would suggest that there may be a double standard. He accused the Liberal Democrats of cheap populism; usually they are guilty of extravagant populism. The populism of the Government is a good deal more economical than that of the Liberal Democrats.
        The proposal provides for an alternative to the travel concession authorities scheme if it is a scheme that is provided by way of section 93 of the Transport Act 1985. It does not provide for an alternative that is provided by some other means. If somebody is receiving a discretionary travel concession by some other means, the proposal does not provide an exclusion. I wonder whether the Minister could explain that—perhaps at another time. I beg to ask leave to withdraw the amendment.
        Amendment, by leave, withdrawn.

      Clause 125

        MANDATORY CONCESSIONS: SUPPLEMENTARY
        Amendment made: No. 187, in page 73, line 29, leave out from "124(1)" to end of line 36 and insert—
        '(2) A travel concession authority must not make any charge for the issue of a travel concession permit.'.—[Mr. Robert Ainsworth.]

      Clause 130

        MANDATORY CONCESSIONS IN GREATER LONDON
        Amendment made: No. 188, in page 76, line 44, leave out from "section" to end of line 8 on page 77 and insert—
        '243, after subsection (5) insert—
        "(6) No charge may be made for the issue to a person to whom subsection (1)(b) of section 242 above applies of a travel concession permit relating to the concession specified in subsection (8) of that section.".'. —[Mr. Robert Ainsworth.]

      Clause 131

        AGREEMENTS PROVIDING FOR SERVICE SUBSIDIES
        Amendments made: No. 189, in page 77, line 20, leave out "current".
        No. 304, in page 77, line 21, after "of insert "traffic congestion,".
        No. 190, in page 77, line 22, leave out "current".
        No. 191, in page 77, line 25, leave out from "their" to end of line 26 and insert "bus strategy;".
        No. 192, in page 77, line 28, leave out—
        'current bus strategy (within that meaning)'
        and insert "bus strategy".
        No. 193, in page 77, line 31, leave out—
        'current bus strategy (within that meaning)'
        and insert "bus strategy".—[Mr. Robert Ainsworth.]

      Clause 132

        GRANTS TO BUS SERVICE OPERATORS
        Amendments made: No. 194, in page 77, line 45, after "State" insert—
        'with the approval of the Treasury'.
        No. 195, in page 77, line 46, leave out—
        ', with the approval of the Treasury,'.
        No. 196, in page 78, line 1, after "State" insert—
        'with the approval of the Treasury'.
        No. 197, in page 78, line 2, leave out—
        ', with the approval of the Treasury,'.
        No. 198, in page 78, line 6, leave out from "as" to end of line 8 and insert "may be determined by—

        (a) the Secretary of State with the approval of the Treasury (as respects England), or

        (b) the National Assembly for Wales (as respects Wales).'.—[Mr. Robert Ainsworth.]

      Clause 134

        NON-METROPOLITAN TRANSPORT GRANTS
        Amendments made: No. 199, in page 79, line 2, after "State" insert—
        'with the approval of the Treasury'.
        No. 200, in page 79, line 3, leave out—
        ', with the approval of the Treasury,'.
        No. 201, in page 79, line 14, leave out from "as" to end of line 15 and insert "may be determined by—

        (a) the Secretary of State with the approval of the Treasury (as respects England), or

        (b) the National Assembly for Wales (as respects Wales).'.—[Mr. Robert Ainsworth.]

      Clause 138

        PART II: REGULATIONS AND ORDERS
        Amendment made: No. 202, in page 80, line 26, after "Part" insert—
        '(whether alone or jointly with the National Assembly for Wales)'.—[Mr. Robert Ainsworth.]

      Clause 140

        INTERPRETATION OF PART II
        Amendments made: No. 203, in page 81, leave out lines 4 and 5.
        No. 204, in page 81, line 9, at end insert—
        ' "London transport authority" means the Greater London Authority, a London borough council or the Common Council of the City of London,'.—[Mr. Robert Ainsworth.]

      Schedule 10

        MINOR AND CONSEQUENTIAL AMENDMENTS ABOUT LOCAL TRANSPORT
        Amendments made: No. 305, in page 184, line 30, at end insert—
        '( ) In subsection (6), for the words following paragraph (b) substitute "to have regard to a combination of economy, efficiency and effectiveness.".'.
        No. 205, in page 184, line 31, leave out—
        'current bus strategy (within the meaning of section 95(2) of the Transport Act 2000)'
        and insert "bus strategy".
        No. 206, in page 185, line 2, leave out—
        'In section 1 of the Road Traffic Regulation Act 1984'
        and insert—
        'The Road Traffic Regulation Act 1984 has effect subject to the following amendments.
        6A. In section 1'.
        No. 207, in page 185, line 11, at end insert—
        '6B.—(l) Paragraph 27 of Schedule 9 (variation and revocation of orders) is amended as follows.
        (2) In sub-paragraph (1), for "sub-paragraph (2)" substitute "sub-paragraphs (2) and (3)".
        814
        (3) After sub-paragraph (2) insert—
        "(3) Where an order is required for the provision of facilities pursuant to a quality partnership scheme made under Part II of the Transport Act 2000 by more than one authority—

        (a) it may not be varied or revoked by virtue of this paragraph by the Secretary of State or the National Assembly for Wales unless he or it has consulted the other authority or authorities who made the scheme, and

        (b) it may not be varied or revoked by virtue of this paragraph by any other authority without the consent of that other authority or those other authorities.".'.

        No. 208, in page 185, line 14, leave out from beginning to "paragraph" and insert—
        '(1) Section 26(1) (conditions attached to PSV operator's licence) is amended as follows.
        (2) In'.
        No. 209, in page 185, line 15, after "2000" insert—
        '(3) After that paragraph insert'.
        No. 306, in page 185, line 25, at end insert—
        '( ) In subsection (7), for the words from "so to conduct" to the end substitute "to have regard to a combination of economy, efficiency and effectiveness.".'.
        No. 210, in page 185, line 26, leave out "current".
        No. 307, in page 185, line 27, leave out "subsection (8)" and insert "that subsection".
        No. 211, in page 185, line 28, leave out "current".
        No. 212, in page 185, line 30, leave out from "their" to end of line 31 and insert "bus strategy;".
        No. 213, in page 185, line 33, leave out—
        'current bus strategy (within that meaning)'
        and insert "bus strategy".—[Mr. Robert Ainsworth.]
        Further consideration adjourned.—[Mr. Robert Ainsworth.]
        Bill, as amended in the Standing Committee, to be further considered tomorrow.

Crimestoppers
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Robert Ainsworth.]
12.28 am
Mr. Bob Russell: While sensible, law-abiding citizens—but not politicians and criminals—are safely tucked up in bed, it is reassuring to know that Crimestoppers is available around the clock in the constant fight to tackle crime.
The title of this debate, as listed on the Order Paper, needs clarifying. It would be more accurate if it read that Government support was needed for Crimestoppers. Astonishingly, Crimestoppers does not receive any financial support from the Government. It is a charity, funded in the main by donations and fund-raising events. Yet its success rate in bringing criminals to justice is such that, if it received supplementary financial backing, even more would be arrested.
The Minister of State, Home Office (Mr. Charles Clarke): Does the hon. Gentleman agree that it is unfortunate that the Conservative Front Bench is vacant during this important debate—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. It is not in order for the Minister to make such an observation. Adjournment debates are the personal property of the hon. Member who is putting forward a subject. These are not general debates involving all Members of the House; they are between the hon. Member moving the motion and the Minister replying.
Mr. Russell: Thank you, Mr. Deputy Speaker.
The Crimestoppers Trust, with its national phone number of 0800 555 111, operating 24 hours a day, is the catalyst acting between business, the media, the community and the police to help to reduce crime, and it is doing just that.
Crimestoppers is now in its 12th year and covers the whole country, through 29 regions. Crimestoppers solves crimes that other methods cannot reach. It provides a safe and confidential means of identifying criminals. Intelligence and observation from members of the public, made anonymously, can lead to the apprehension of criminals who might otherwise escape detection. It means that people can report criminal activity without any fear for their own safety.
The statistics behind the Crimestoppers success story are amazing. In a reply to a parliamentary question that I tabled recently, I was told that, last year, as a direct result of people phoning Crimestoppers, a record 5,300 people were arrested and charged. The Crimestoppers organisation tells me that, in a large number of cases, the police had no previous knowledge of the criminal, or, if the person was known, he had not been connected with the crime reported by the caller.
Last year, calls to Crimestoppers led to the conviction of 38 people for murder, 22 for attempted murder, 13 for rape and 18 for sexual assault. Convictions for robbery totalled 202, for assault 181, for burglary 338, for firearms 28, for handling stolen goods 209, for arson 34, for theft 410, for vehicle crime 667, for fraud 141 and for various other offences 691.
816
The biggest single category was drugs, with 2,308 convictions. That is a matter to which Crimestoppers has given special attention with its SNAP—"Say no and phone"—campaign. The same number is involved: 0800 555 111. People are encouraged to phone with information about drug dealers. In one case, the Crimestoppers guarantee of anonymity led to the seizure of cocaine worth more than £200,000.
Since Crimestoppers was established, about 34,000 people have been arrested and charged with various crimes, ranging from murder and other serious assaults to drug dealing and theft. More than 300,000 anonymous calls have been made and property worth more than £42 million has been recovered. On average, each week, stolen property worth almost £60,000 is retrieved. In one case, a call to Devon and Cornwall Crimestoppers led to the arrest of three people responsible for several burglaries and to the recovery of 44 firearms.
Following the murder of a man in a midlands pub, one call to Crimestoppers named the two culprits. In the west country, a man was charged with five offences of indecent assault and gross indecency against young children after a call to Crimestoppers gave the only lead. Drug dealing from a Birmingham house was brought to the notice of the police thanks to a call to Crimestoppers. Those examples—and many more—prove the value of Crimestoppers and illustrate how much more could be achieved.
Tackling car theft is another area in which calls to Crimestoppers can lead to criminals being arrested. Vehicles with a combined value in excess of £1 million have been recovered thanks to tip-offs associated with the SMART—stop motor crime and ring today—campaign. Again, the same national freephone number is used: 0800 555 111. In the north of England, one call led to a person who admitted more than 500 offences of stealing cars.
Smuggling of tobacco and alcohol is a growth industry, with millions of pounds of revenue lost every year. The Tobacco Alliance, which represents many of the UK's 26,000 independent retailers of tobacco—mainly corner shops and newsagents—estimates that as much as 80 per cent. of the roll-your-own tobacco consumed in this country has been smuggled. For cigarettes, the figure is put at 25 per cent. and rising every year. As well as threatening small businesses, the illegal trade leads to under-age sales. The same thing happens with smuggled alcohol.
The alliance recommends Crimestoppers as the most effective way of reporting tobacco-related crime. Crimestoppers works in partnership with Customs and Excise in tackling the bootleggers, and its work has resulted in significant recoveries of smuggled tobacco and alcohol. The lost revenue is huge. Investment in Crimestoppers would more than pay for itself with the increase in the number of criminals who would be identified. For example, one tip-off led to five people being arrested. It was estimated that they had evaded some £750,000 in duty. Given the obvious benefits that Crimestoppers has proved it has in bringing the identity of criminals to the police, would not its success be greatly enhanced—with even more criminals being arrested—if the Government provided funds to extend the operation, including greater publicity, which is so vital?
Mr. Tony Colman: Obviously I am pleased with the hon. Gentleman's paeon of praise for

817
Crimestoppers, which is based in my constituency. Will he join me in the hope that, when the Minister visits Crimestoppers on 22 May, he will see for himself its excellent work and consider providing further funding?
Mr. Russell: I thank the hon. Gentleman for that intervention. I am sure that the Minister will be well briefed when he visits the hon. Gentleman's constituency and that Crimestoppers will benefit as a result of that visit.
Backing from the media is crucial to publicising Crimestoppers. Newspapers, radio and television are to be congratulated and thanked for what they do. For example, tonight's issue of the Colchester-based Evening Gazette carries a report of a man who was shot in the face with an air gun. The final paragraph says:
Detectives hunting the gunman have appealed for anyone with information to contact them on Crimestoppers 0800 555 111.
Much more needs to be done to publicise Crimestoppers so that its number becomes as familiar as 999. Advertisement hoardings and more permanent poster displays should feature the number. It could also be included, at minimal cost, in Government publications and other public literature, and on the vast range of forms that people are required to fill in during the course of the year. An excellent example was set by Post Office Counters when it launched a campaign to tell the 28 million people who visit post offices each week about Crimestoppers. That is another reason for retaining the nationwide network of post offices.
Despite what has been achieved so far, research has shown that only a quarter of the population understand Crimestoppers. It is hoped that this will be improved by, for example, developing strategies within crime and disorder partnerships.
Using Crimestoppers is an easy way of talking to the police informally and anonymously. Every day, hundreds of people call Crimestoppers to help the police solve many crimes, not just the most serious ones. It is highly successful and proves that it is possible to do something to make society safer.
A person who phones Crimestoppers on 0800 555 111—from anywhere in the country—will not be asked for their name, address or phone number. The police will not seek to contact the person who has phoned. If people say that they want to phone again, or perhaps claim a reward, they are given a code number.
The director of Crimestoppers, Mr. Digby Carter, told me about a survey in Stockport, Greater Manchester, which revealed that the fear of intimation was so severe that 83 per cent. of residents said that it would prevent them from providing information directly to the police. However, the same survey reported that 76 per cent. said that they would use Crimestoppers.
Research has shown how important Crimestoppers information is in preventing crime as well as solving it. Indeed, research by the Vauxhall centre for the study of crime at the university of Luton shows that more than 40 per cent. of crimes revealed would not even have come to the notice of the police but for Crimestoppers. In nearly two-thirds of cases, offenders disclosed by Crimestoppers callers were previously unknown to the police—or known, but not suspected of the offence in question.
818
The Luton survey concluded that information provided anonymously by the public to Crimestoppers solves crimes at a rate likely to be the envy of police officers in general. In 63 per cent. of the cases the information provided to the police by Crimestoppers was crucial to the crime's detection, and in a further 27 per cent. it was useful.
Senior development fellow Mr. Alan Marlow, who conducted the research, commented:
Our research shows that Crimestoppers is highly productive. For example, each individual in one of the Crimestoppers Offices was responsible during the year for the apprehension of over 100 offenders not suspected of the offences in question.
On behalf of the Association of Chief Police Officers, Deputy Assistant Commissioner Bill Griffiths of the Metropolitan police said of the survey:
Crimestoppers, with its guarantee of anonymity, and therefore safety from reprisals, does add real value to the work of the Police. The Police are clearly right to make a commitment to Crimestoppers. It is a best value operation, and we want to see its use increased still further.
Let me stress again that Crimestoppers is a charity. It has limited resources. The staff to volunteer ratio is 1:20. Each Crimestoppers arrest costs the trust £200, and there are 14 of those every day. Real support from the Government—not just warm words—is necessary if the Crimestoppers success story is to continue to develop.
A reward, paid anonymously, and without police involvement, is available to those who provide information that leads to an arrest and charge, but very few people ask for one. Last year, rewards represented only 2 per cent. of Crimestoppers' expenditure. Only six in every 100 callers who would qualify for a reward from the Crimestoppers Trust seek it.
Crimestoppers is not only of considerable value to the police in solving crime, it is also highly cost-effective so far as the taxpayer is concerned. The need for Crimestoppers has never been greater. Spending cuts in the police service and a reduction in the number of police officers mean that every effort must be made by the community to help in the fight against crime. Crimestoppers is already playing an active role in doing this.
For a relatively modest contribution to supplement the work of Crimestoppers, I urge the Government to meet with officials of the Crimestoppers Trust to see what level of aid is required. I gather that such a meeting is to take place soon. Last year, it cost £1,648,000 to operate Crimestoppers—the equivalent of the salaries of four premier division footballers. A pound for pound matching grant would more than pay for itself in the increase in the number of criminals brought to justice and the effect that it would have on preventing crime.
I hope that this early morning debate will make more people aware of the excellent work that Crimestoppers does. For those who need reminding, the number is freephone 0800 555 111.
12.42 am
The Minister of State, Home Office (Mr. Charles Clarke): I must first apologise for my earlier remarks, which I acknowledge were out of order.
I am very grateful to the hon. Member for Colchester (Mr. Russell) for obtaining this important debate on Government support for Crimestoppers. As he will

819
acknowledge, many Members of the House are engaged with Crimestoppers campaigns in their areas—indeed, I have been involved in launching various initiatives in my area. I am delighted that the hon. Gentleman has brought this matter to the attention of the House.
It is important to emphasise the statistics involved. According to information supplied by the Crimestoppers Trust, the number of people arrested and charged for each of the past five years as a result of information supplied to Crimestoppers was as follows: in 1995, 3,355 people were arrested and charged; in 1996, 4,347 people were arrested and charged; in 1997, 4,726 people were arrested and charged; in 1998, 5,169 people were arrested and charged; and in 1999, the figure was 5,300.
The 5,300 arrests in 1999 were for very serious crimes, as the hon. Gentleman implied. Some 38 were for murder, 22 for attempted murder, 13 for rape, 202 for robbery, 181 for assault, 338 for burglary, 28 for firearms offences, 209 for handling stolen goods, 2,308 for drugs—a point that the hon. Gentleman made—34 for arson, 410 for theft, 667 for vehicle crime, 18 for sexual assault, 141 for fraud and 691 for other crimes. The hon. Gentleman has drawn attention to that substantial record of achievement in sponsoring this debate, for which I am grateful.
As the hon. Gentleman said, my officials are in regular and constant touch with Crimestoppers. I will be visiting the Crimestoppers Trust head office in Putney on 22 May. I take this opportunity to pay tribute to the work done by my hon. Friend the Member for Putney (Mr. Colman) in dialogue with myself and others and, more widely, in promoting the work of Crimestoppers, which is very important.
The hon. Member for Colchester referred to several Crimestoppers campaigns—I shall focus on two of them. The first is the SMART campaign—"Stop motor crime and ring today". With that campaign, Crimestoppers has made a valuable contribution to the fight against vehicle crime—an activity that accounts for 20 per cent. of all recorded crime and costs us at least £3 billion a year. It is encouraging to see from statistics produced by Crimestoppers that, in 1999, the campaign resulted in 667 people being arrested and charged with vehicle crime offences—a 30 per cent. increase on the previous year. I welcome the success of that campaign.
The SNAP—"Say no and phone"—and "Rat on a Rat" campaigns to which the hon. Gentleman also referred are an important element of the work of Crimestoppers. The Government are also committed to a reduction in the misuse of illicit drugs and in associated crime. Two of the main aims of our anti-drugs strategy—"Tackling drugs to build a better Britain"—are to protect our communities from drug-related anti-social and criminal behaviour and to enable people with drug problems to overcome them and to live happy and crime-free lives.
The police give a high priority to tackling drug-related crime and to reducing street dealing. They recognise the added value of involving other partners, such as Crimestoppers, in tackling those aspects of crime.
The SNAP campaign urges people to inform Crimestoppers anonymously if they know of anyone who regularly supplies drugs or commits any drug-related crime. It success is greatly encouraging—I gave some of the statistics earlier.
Another excellent example of the collaborative approach was the Metropolitan police's Operation Crackdown. That was co-ordinated with Crimestoppers
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and included an advertising campaign urging the public to "Rat on a Rat" by calling Crimestoppers. The organisation received more than 2,000 calls—300 pieces of intelligence were generated.
The success of "Rat on a Rat" demonstrated not only that the public want action against drugs, but the benefits to be reaped from involving Crimestoppers in police operations targeting such criminal activity. It highlights partnership at its best.
There is scope for the forging of closer links between Crimestoppers and other voluntary sector organisations working towards crime reduction—such as the National Neighbourhood Watch Association, Crime Concern, Victim Support and the National Association for the Care and Resettlement of Offenders. I should like such links to be developed further.
On 13 April, I chaired a meeting to which I invited representatives from those organisations and Crimestoppers to discuss the possibility of their working more closely, with Government support, to develop a clearer strategic approach, with the overall objective of helping to reduce crime and disorder. We felt that the ambition of crime and disorder partnerships should be to nurture those organisations in local communities. There were instances of them working together on an ad hoc basis, but we believe that there is significant potential to increase such links.
The active community element reflected in the different orientations of those organisations brings together people who could be more effectively associated in the campaign to strengthen their communities against the criminals in their midst. That would be positive for all of us. We are working hard on that matter, although there is no intention to deprioritise the contribution of Crimestoppers or of any of the other organisations. When they all work together, the sum of their parts is greater than the whole.
In that context, the National Neighbourhood Watch Association is organising a seminar on 7 July. We hope that representatives from that wide range of organisations will be able to consider ways of creating the closer links to which I have referred so as to reduce crime and disorder. We hope to produce papers setting a framework for achieving that closer co-operation, nationally and locally, for consideration at the conference.
Mr. Russell: Will the Minister say how many of the other organisations that he mentioned receive Government financial support?
Mr. Clarke: I shall come to that well-made point shortly.
Although voluntary sector organisations generally support the idea of more strategic link-up and although some have expressed concern that they might not have sufficient resources to reach out to other organisations, a significant role can be played by considering in a co-ordinated fashion what national support we offer them. I do not have the figures for which the hon. Gentleman asked, but the Government directly support the other organisations, such as NACRO, neighbourhood watch, Victim Support and Crime Concern, that I mentioned.
We set up the seminar on 13 April because we believe that we should think much more coherently about the support that we give to all the organisations that work to develop an active community. Perhaps I should confess

821
to the hon. Gentleman that I was tempted to announce a grant to Crimestoppers tonight, because I acknowledge that there is a strong case for giving it financial support. I am not announcing that grant in response to this debate not because we have any questions about Crimestoppers, which we value and esteem, but because we want to ensure that we have a coherent approach for all the organisations, so that they work together on the framework.
I can reassure the hon. Gentleman and my hon. Friend the Member for Putney that we are committed to supporting Crimestoppers financially in the same way that we are committed to supporting the other organisations. However, we are keen to ensure that the Home Office does not provide a bit of money here or a bit of money there to the range of different organisations. With them, the Home Office should consider properly how to provide support so that we can maximise its impact.
We are not imposing a policy on the organisations. Neighbourhood watch, NACRO, Crime Concern, Victim Support and Crimestoppers, with which I have had a constructive dialogue, all recognised at the seminar on 13 April that they, as well as the general crime reduction initiative, will benefit if we can co-ordinate our efforts. I hope that the hon. Gentleman will accept that, although I am not being gracious enough to offer Crimestoppers X amount of money as a result of this debate, I acknowledge the major contribution that it and the other organisations can make. We shall provide funding in that context.
I mentioned the seminar that will take place in July. At that seminar, I hope that we shall reach conclusions about precisely what form of support should be offered and how it should be provided. Although support from headquarters is important, we should try to ensure—by using the web and electronic and other means—that organisations throughout the country make a greater impact by working together in the communities where that is most important.
I can say particularly bluntly at this time of night that some of the organisations compete for members and in their activities and commitments. None of them want to do that—that is not their ambition—because they want to work together. The Government have a catalytic role to play that they have not played in the past. That is why we held a seminar on 13 April and will hold a conference on 7 July. I hope that, through those meetings, we will be able to construct a coherent approach to all these issues.
At the meeting on 13 April, it was decided that there should be two further meeting with officials and representatives—on 12 May and 12 June—to draw up papers commissioned for the seminar on 7 July. Contributions will address several subjects. The first is how best to achieve close co-operation between the relevant organisations at national and local level and the
822
second is consideration of the forms of support, including training, that the organisations need. As we involve volunteers so much, training is important.
The third subject is what business involvement is most useful. Several business organisations contribute, in different ways, to Crimestoppers and other bodies, and are often unaware of how best to focus their energy. We can help in that regard. The fourth issue is what are the best sources of information and how that information should be disseminated, hence the points that I made about the web. The fifth serious matter is the Home Office funding arrangements, which the hon. Gentleman raised and which others have mentioned.
The Home Office intends to provide papers, on the basis of information received, to set out a framework for a much more co-ordinated approach by voluntary sector organisations. Those papers will be considered at the conference on 7 July. I know that the hon. Gentleman's comments will be given full consideration at that event.
I know that the hon. Gentleman, like my hon. Friend the Member for Putney and myself, is a strong, committed supporter of Crimestoppers, but he knows that organisations such as neighbourhood watch, Victim Support and Crime Concern can make a major contribution. He will agree that everything that we can do to get such organisations working together is positive, and I know that he will encourage such co-operation.
As I said, I was tempted to make an announcement about the funding that we will provide for Crimestoppers, but I did not do so because we have been considering carefully the request for financial support from the director of the Crimestoppers trust. We have considered the application in the context of how we can best deploy our resources to reduce crime. We hope shortly to make a decision in the wider context of drawing up the strategic framework.
Crimestoppers can be confident that because it has a long track record, to which I have already referred, it will be well funded, but I shall not give the hon. Member for Colchester the gratification, if that is the right word, of saying that I will give him X amount of cash this evening. I know that he will join me in urging Crimestoppers to work with other organisations concerned with building an active community.
My request for the hon. Gentleman's support is gratuitous because Crimestoppers itself is entirely committed to that end. Developing an active community is very important to us, and I am grateful to the hon. Gentleman for securing this Adjournment debate and airing some of the issues. I am especially grateful to my hon. Friend the Member for Putney for his consistent campaigning with me and others on behalf of Crimestoppers. I hope that I have set out the Government's approach on these important matters.
Question put and agreed to.
Adjourned accordingly at two minutes to One o'clock.

Preamble
[SIR ALAN HASELHURST in the Chair]

Law and Order
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Robert Ainsworth.]
10 am
Mrs. Gillian Shephard: I am very grateful to have secured this debate on a matter greatly exercising the minds of rural communities. The House—indeed, the whole country—knows that the issues raised by Mr. Tony Martin's trial have touched a nerve in the nation's consciousness. During the nine months since the incident, I have not commented on the crime, the trial or the outcome of the trial. Mr. Martin is to appeal, so the matter is again sub judice, and I do not intend to break my self-imposed embargo.
Although I am concerned about the impact of the episode on the people of South-West Norfolk, especially those who live closest to Mr. Martin's property in the village of Emneth, I am even more concerned about what the incident has revealed about the state of policing in rural areas and people's attitudes to the police's ability to protect them and their property.
We should not forget that rural communities are collections not only of individuals, but of businesses, including agriculture. In its journal this month, the National Farmers Union makes its concerns clear. The latest NFU Mutual figures show that rural theft costs the farming industry more than £93 million a year, and the journal states:
The Government must act now to deliver adequate policing and security for people living and working in the countryside.
I feel sure that the Minister will have seen that journal, as it is in front of him.
The NFU's president, Mr. Ben Gill, comments:
There is a growing feeling of helplessness in rural communities—stemming from the inability of the legal system to deliver successful prosecutions.
In a letter dated 2 May to my hon. Friend the Member for Uxbridge (Mr. Randall), the Country Landowners Association draws attention to the report, "The State of the Countryside 2000", published on 26 April by the Countryside Agency. That report says that some crime, such as vehicle crime, has been rising faster in rural areas than in urban areas. The letter says:
The countryside may still be a safer place to live, on the law of probabilities, but the Tony Martin case, supported by others, demonstrates that if the police are not in a position to respond fast to calls, or to give people the protection they need, then in an isolated rural situation the mere existence of a police force ceases to give people the confidence they need in the battle against crime.
Furthermore, the increased mobility of criminals between rural areas, and from urban to rural areas, means that traditional levels of policing in rural areas are no longer sufficient to tackle criminals who can be sixty miles away before a burglary call is investigated.
The Minister will know, because I have raised the matter several times in the House and in correspondence with him that I urge him to act on the recommendations
158WH
of the report on policing in rural areas that his Department commissioned a year ago. He or his colleagues will have discussed with the chairmen of the 11 most rural police authorities the findings of that report, which would give Norfolk an additional £2.4 million for extra police on the beat.
In a letter to me dated 28 April, the chairman of the Norfolk police authority, Mr. Jim Wilson—recently appointed—makes his point with some force. He says:
It should be remembered that Norfolk, despite being a growth county, territorially one of the largest, and an area which attracts thousands of holidaymakers every year, is at the bottom of the pile as far as police-to-population ratios are concerned. Norfolk bid for 90 further officers in the recent Home Office 'challenge funding' but we were only allocated 66 over a three-year period, now possibly reduced to two years. Since 1997 total officer strength has fallen by 50.
Mr. Wilson also describes the further pressures on Norfolk's existing police budget. He points out that the authority is expected to sign up, apparently, for a period of 19 years to the new national communications service for the police, which seems odd in a field as rapidly changing as communications technology. The Minister may like to comment on that, if he can, although it could be a misunderstanding on Mr. Wilson's part. That will cost the force £3 million in capital and up to £630,000 a year in revenue. He adds:
We in Norfolk are uncertain at this stage that we can afford the necessary menu options; if we cannot it will impact on our ability to deliver an enhanced front-line service.
When we had the opportunity to debate some of those issues last week in the excellent Adjournment debate on police numbers that was initiated by my hon. Friend the Member for Uxbridge, I said that modernisation and up-to-date technology were clearly essential to combat equally up-to-date criminal activity. However, that should not be at the expense of other priorities and, at the very least, should not render front-line policing less effective, as Mr. Wilson implies would be the effect of the current strategy.
Mr. Wilson goes on to point out that the increased bureaucracy and paperwork imposed on the police by best value legislation and the requirement over the past two years to implement annual 2 per cent. efficiency plans across all forces—irrespective of their capability to make such annual savings—will be time-consuming and expensive. He uses a worrying phrase in that he describes that activity as:
another diversion from what the public would recognise as the real purpose of policing.
Those are the words of the chairman of the Norfolk police authority. I hope that the Minister can comment on that point, which comes from the coal face. Clearly, he would agree that any diversion from the real purpose of policing should be avoided.
I also hope that the Minister can expand on his interesting comment in last week's Adjournment debate that he is seriously considering the problems posed by the funding of pension payments. Of course, I realise that that is not a new problem, but one that has grown over the years. However, such payments currently absorb 15 per cent. of the revenue budget of the Norfolk police authority, according to its chairman.
Police morale is affected by those factors and by the criticism that the police feel that they have suffered as a result of a number of high-profile cases, include that

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of Tony Martin. In Norfolk, the police have achieved two extremely high-profile successes in terms of an arrest and charge in one high-profile murder case and a conviction in another case. In the many hundreds of letters that I have received about the Martin case and the issues that it raises, the legal system is criticised at least as much as the police. The Minister will be aware of that.
However, there are police operational matters uncovered by the case and frequently spoken of, for which the Minister is not responsible, but of which he needs to be aware. I think that such matters exasperate local police on the beat as much as they do the public. Many of those matters were raised last week at a meeting of the Swaffham chamber of trade in my constituency, attended by a police inspector, a sergeant and a constable. The Minister might like to note that the chamber presented the constable with a mobile phone, so that he could be contacted at all times. The Minister will doubtless say that that is a good example of community police partnership. [Laughter.] So it is, but he will also accept that it shows that the chamber of trade feels that it is sometimes difficult to get anyone on the beat. I certainly do not decry the generosity of the chamber of trade, which was well meant, or its relationship with the local police, but I should like the Minister to reflect for a moment on where we now are.
It was pointed out at that meeting that, in the past two and half years, 50 per cent. of the constables, an inspector and two sergeants had been lost because of reduced funds. Poor-quality police cars with high mileages on the clock did not help. Response times to calls for help, the routeing of 999 calls to a central point in Norwich where the staff did not know the location of villages across the county and computer problems were raised at the meeting by local business people who were anxious about what they see as escalating security risks for them and their businesses. Those are clearly not simply matters of resources, although some of them are resource related. That is the view not only of the public, but of the police.
Mr. David Prior: My right hon. Friend will know the market town of North Walsham in my constituency. I believe that she was born there, or at least went to school there. I met a great number of people in North Walsham last week who told me that they were frightened to go out at night. That would also be true of towns like Swaffham in her constituency and Fakenham in mine. There is a feeling that there are simply not enough policemen visible on the beat to protect people. It is the fear of crime, rather than levels of crime, that is important in rural areas.
Mrs. Shephard: There is no simple correlation between the number of police on the beat and the reduction of crime: I know that the Minister will tell us that at the end of the debate, because I have heard him say it many times. But there is a clear correlation between people's attitude as to whether they are at risk and the number of policemen that they see. Indeed, it is connected to my next point, which has been my constant theme during the past nine months while the Tony Martin case has dominated the headlines. If people feel that the police lack the resources to protect them and
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their property—my earlier remarks illustrate the fact that the police share that view—they will be tempted to take the law into their own hands. The consequences of that have been all too tragically demonstrated by the outcome of the Martin case.
Mr. Lovell of Tipps End in my constituency puts the matter succinctly in his letter to me of 24 April. He says:
Rather than make householders more fearful about tackling burglars, the case has hardened many people's views. I have heard it for myself. This is a very worrying trend, and unless something radical is done, the situation, I fear, will get worse. There is now talk of vigilante groups armed with illegal weapons and a total feeling of disgust and frustration directed towards the police and legal system. Those of us who believe in the rule of law are very concerned about the mood of the community.
A letter from a farmer states:
In the rural areas the police presence is now non-existent. The criminals know this. We regularly suffer minor thefts and the police are too over-stretched and lacking in manpower to investigate them satisfactorily. When they are called to the scene of a crime they take, on average, 25 minutes to arrive, their excuse being that, even with grid references and postcode etc., they are still not able to locate us. Is it surprising that some are beginning to take the law into their own hands?
I have received letters on this subject from all over the country. Mr. Derek Bromwich from Greenford in Middlesex takes the point further. He asks:
Why have police numbers fallen so dramatically over recent years? Has it more to do with political correctness and disillusionment with the criminal justice system…? Will you politicians—
the Minister will enjoy this—
who live in relative luxury with high security and personal bodyguards just get real and deal with this problem. Otherwise we have no option but to take the law into our own hands. We are just not safe either in the city or the country and don't insult our intelligence by quoting bogus, inaccurate and manipulated crime statistics to pretend crime is going down. We live in the real world and we are not all stupid.
The Minister is bound to be aware of the current strength of feeling about law and order in this country. He occupies a hot seat, which would not be made more comfortable by reading the survey in the previous issue of the Fenland Citizen. Its readership was asked to telephone in with answers to questions about the Tony Martin case, one of which was, "Do you feel safe in your own home?" A staggering 91 per cent. of the more than 1,000 people who rang in replied that they did not.
The police are aware of these attitudes, which do not make their job any easier, especially when they feel under-resourced. All hon. Members will have heard from their constituents' anecdotal evidence of the police arriving hours after an incident or, even worse, not arriving at all. At the Swaffham chamber of trade meeting in my constituency last week, a shopkeeper in the town, Mrs. Carol Baker, described arriving at her shop at 7.30 in the morning to find that it had been burgled. She reported the crime to the Norfolk police central switchboard at 7.45, was told that no one could attend the crime and was given a crime number for her insurance claim. It was 36 hours before any police officer attended; and five whole days later, the local police had still not been informed about her problem because it had been communicated to a computer. The exasperation of the local police can only be imagined: they would have been as infuriated as she was. Her confidence in the ability of the police to help her took a severe bruising.

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People have written from all over Britain. Many of them took the trouble to say that they were not members of my political party. Much of what they said was about Tony Martin's trial, the verdict and the sentence; but many also commented on how they felt about the current performance of the police. The most important issue raised by the case is that people feel that police numbers are so thinly stretched that they cannot protect individuals' property.
Since the Government came to power, police numbers have fallen by 2,300. The number of civilian staff has remained the same and the number of specials has fallen by 3,500. Worse, the Norfolk police authority chairman has made it clear that the new communications system will demand extra money and the Government's own requirements for police bureaucracy are eating further into police time—a
diversion from what the public would recognise as the real purpose of policing,
as Mr. Wilson put it. The consequent inability of the police to respond as they would wish to calls for help from the public is beginning to diminish public respect for them, through no fault of their own. Their own morale is suffering.
The solution is at least partly in the Government's hands. Some problems are not new, but others—the reduction in police numbers, the increase in bureaucracy and paperwork and the lack of interest in rural communities—are of the Government's own making. Rural people and their problems matter too. They deserve some priority of treatment. I cannot believe that the Minister will stand by and watch respect for the law crumble, partly as a result of reduced resources.
The Minister has taken the trouble to listen to concerns, many of which have been voiced in his own predominantly rural county. He has promised to examine the issues carefully in the run up to the publication of the rural White Paper and the comprehensive spending review that is being prepared for later in the summer. I ask him to persuade his colleagues in the Government to reconsider the Government's spending and attention priorities, to reflect on what is happening in rural communities and to understand that the issue is much more than simply a matter of resources—it is about respect for the law and taking action before it is too late.
10.19 am
Mr. David Drew: I am delighted to be able to take part in the debate. Because of Select Committee duties I was unable to attend last week's debate on police numbers, but I am sure that some of the issues that the right hon. Member for South-West Norfolk (Mrs. Shephard) mentioned were highlighted. I have, however, spoken in both the debates on police grants that have been held in recent years, so I hope that I have shown an interest. My hon. Friend the Minister will also know about the meetings that we have had.
It is important to put the record straight. I hold the right hon. Member for South-West Norfolk in high esteem—we worked together on the Select Committee on Modernisation of the House of Commons and still bear the scars—but I was disappointed when she said that the Labour party did not care about rural areas. Labour Members do not pretend to have a new feel for
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rural issues but have worked relentlessly over many years to highlight them. Such issues have not appeared on the political antennae only recently, but date back decades.
I do not want to trade newspaper cuttings with the right hon. Lady, but the headline story in my local weekly newspaper last week said that the village bobby and station were about to be axed and taken away from the good denizens of Minchinhampton, which is a fairly large village in the Cotswolds, in my constituency. The newspaper announced that the police constable, Jim Gregory, whom I know well and who has been an excellent bobby over the years, is about to be moved to rural protection duties. I hope that that will be a good way for him to see out his later years in the police force, but the change leaves the authority with a dilemma over his replacement. Jim lives in the police house in Minchinhampton and operates the police station next door, and I should make it clear that I do not want to push him out of his house, because he wants to see out his years there. However, Cheryl Thomas, the inspector for the area in which I live, has said that the police authority will not seek a replacement for Jim, and I want to tease out that dilemma.
We must replace the Jim Gregorys of this world, but we cannot do so by putting officers into the various communities, because there are other pressures and policing has moved on. That dilemma, which I have faced several times, relates to the visibility and accessibility of the police. Those issues are important in rural areas; if people do not see their police, they lose confidence and feel that they are unpoliced. At the same time, that approach to policing is not, in the main, the way to catch criminals. The dilemma that we face is how to balance visibility and accessibility with the effectiveness of the police force.
I am carrying on a funny sort of dialogue, because I have not talked to my police authority and the police about how they reached their decision. However, by pure chance, a police consultative committee meeting is taking place in Minchinhampton tomorrow night, and I imagine that it will be well attended. Inspector Cheryl Thomas announced the news about Jim Gregory at a parish council meeting last week.
I would like assurances from the police that they will give the area a named officer, as they have done elsewhere. Whitminster, which is also in my constituency, lost its police station 18 months ago, and WPC Debbie Lord was allocated as its named officer. That seems to have worked reasonably well. It is important for someone, in co-operation with other agencies, to have responsibility for an area, even if, as with Jim Gregory, his operational duties occasionally pull him away from the community. That has long been the case, but it is more the case now. It is important to have a mobile police force, which can do what we need it to do.
Just before Christmas, I was part of a delegation to my hon. Friend the Minister, which included the chief constable for Gloucestershire, Tony Butler; the chairman of the police authority, Brigadier Michael Browne; and the chief officer of the county council, Richard Cockcroft. The hon. Member for Cheltenham (Mr. Jones) was also a member of the delegation. Members of the public who say that Members of Parliament have a well-protected, easy life should

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remember what some people go through. Understandably, people sometimes have short memories, but they should be reminded of the tragic events in Cheltenham, which bring home to us the risks taken by anyone in the public service.
The key points raised by the delegation may have had some impact, as the Minister has spoken about those matters on more than one occasion, and we are gratified by what he said. We made an early bid for what are known colloquially as Jack Straw bobbies. I would not say that Gloucestershire got its fair share, as we never get—well, never argue that we get—a completely fair share, but police numbers have been increased, which is most welcome. We bid to ensure that when those officers have been trained there will be a rural dimension to their allocation. We stressed the importance of the sparsity factor as a way of considering how the correct formula is decided, and emphasised that the distribution of police numbers should take account of the mobile criminal fraternity.
My county faces the problem of criminals coming from Bristol and Birmingham, and that has begun to hit rural areas. Constituents and members of the public sometimes allege that the number of offences is up when in reality it is not, unless someone is doing something strange. There are always arguments about how the figures are counted and how crime is recorded, but whenever I ask the police, there is a decline in the number of crimes. However, it needs only one event such as the Tony Martin case to bring home to all of us—
Mr. Oliver Heald: I thought that the hon. Gentleman was talking about Gloucestershire. Crimes there rose by 1,932 last year—an increase of 4 per cent.
Mr. Drew: As I was saying before the hon. Gentleman intervened, it is a lot to do with how crimes are recorded. In Gloucestershire, we are trying to record crime properly and get to the root of what is happening. I shall not bandy statistics with the hon. Gentleman, but in many areas, especially rural areas, there has been a decline—although not significant—in the number of crimes. However, even if we play the statistics game, we ignore crime at our peril because what is important is how it is perceived. I entirely agree with the right hon. Member for South-West Norfolk that how one perceives what is happening is very significant. I raised the matter in a previous debate on the police.
A Women's Institute survey highlighted the degree to which people fear crime and genuinely see it as the most important issue in determining their quality of life. I will not argue about statistics with the hon. Member for North-East Hertfordshire; crime is declining, but although the recording of crime may have improved, there is much more to do.
Dr. Ian Gibson: It is rather novel for me to think about matters relating to crime, in spite of the fact that my home was burgled twice in the past six months. Although a House of Commons champagne bottle was taken, and found in the back of a car during a machete fight, the police were unable to nail the two
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culprits. I wonder about people's perception. What is it that people perceive when they are being burgled, mugged or raped? What sort of perception do the people have whom my hon. Friend spoke about? What are they most frightened of?
Mr. Drew: I shall try to answer my hon. Friend. They are fearful of what appears in the headlines, but their overwhelming fear is that it will happen to them. That is now just as likely to happen in rural areas as in urban centres. Like my hon. Friend, we can all cite such experiences. My office has been broken into twice recently—I suspect by the same person. The first time, he took £5. The second time, he took £2. That tells us something about Labour party offices, which seem to get poorer rather than richer. I am not sure when we can expect matters to improve.
Rural areas suffer not only from the activities of mobile criminals. In rural areas—my constituency is typical of a rural area, with market towns with a rural hinterland—members of a hard core of local criminals seem to commit the same crimes time after time. The police are frustrated because the crimes of many of those who are regularly arrested are drugs related. We need a police presence on the streets because it would give people confidence and make the criminals think twice about the daft things that they often do.
Mr. Prior: I am sorry to hear that the hon. Member for North Norfolk—
Dr. Gibson: You represent North Norfolk.
Mr. Prior: I am sorry to hear that the hon. Member for Norwich, North (Dr. Gibson) had a bottle of champagne stolen. He certainly would not have wanted to drink it last Thursday night.
Does the hon. Member for Stroud (Mr. Drew) believe that it is the fact that repeat offenders continuously receive short custodial sentences that so undermines the morale of the police force?
Mr. Drew: Yes, I do. One of the Labour party's key manifesto commitments was to speed up the course of justice. That can be done in two ways. First, we must convict criminals and, when appropriate, commit them to prison. Secondly, we must have an overall approach to dealing with crime. Everyone from the chief constable and the police to the various agencies concerned welcomed the youth justice reforms that we introduced, but the improvements will not come about in a matter of months or years; they will take decades.
Until recently, many communities knew the hard-core group of local criminals; indeed, they were so notorious that they were often accused of things that they had not done. It is important to deal with them. I am not saying that the problem does not exist in urban areas, but in rural areas it is easier to pinpoint those people; because of the way in which communities still hold together, they know exactly what is going on. Until recently, my own community of Stone house had an amazing clear-up rate of more than 70 per cent. because certain people were always known about. Unfortunately, fractiousness there during the past five years has made that clear-up rate more difficult to achieve.

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I wish to comment on what the Government have done so far and what should happen next. It is vital that the police have a presence on the streets, in which named officers are responsible for certain areas. Not only will they been seen doing their daily task, but they will be known from their visits to schools and community centres. That will build up people's confidence. We must also acknowledge that fighting crime is about being mobile. Mobility can be improved by ensuring that we have an effective police fleet and by making the other changes that we know to be necessary.
The right hon. Member for South-West Norfolk spoke about the chamber of trade in her constituency giving a mobile phone to a constable. Police in Gloucestershire might obtain better reception on mobile phones than they do on their radios. I go out with the police regularly and I have discussed these problems with them. I could be a good luck charm, as I have not seen the malaise that has been mentioned, although I know that it is real. Until recently, the police have had to keep changing their radio wavebands as they go from one side of the valley to the other and so on. These are acute problems and, although there have been arguments about the funding of the police radio project, it is crucial that it is completed as soon as possible, so that communications will be as rapid and effective as they can possibly be. I hope that the Minister will yet again reiterate that we are simply waiting for the money to be made available, and that the sparsity argument is won. We know about the associated problems, which are faced not only by farmers and other isolated rural businesses but by rural communities, especially in hamlets, where people feel very left out.
I should point out the importance of security funding—argument continues on this private matter—in these issues. If I did not throw this subject into the debate, my chief constable would say, "You made a good speech, but you failed yet again to mention that some of us feel a little bit miffed about the security issues, which have not been properly listened to in relation to the complete funding picture."
As the right hon. Member for South-West Norfolk rightly said, the police pensions issue is also highly significant. Among all the other constraints under which any public service will operate, the police pensions issue is the one that is especially important for police. We must grasp that nettle. I will not say that the current Government are more responsible for this matter than were the previous one, from whom all the problems came. They created a time bomb that was obviously going to explode at some point. We know that if we do not do something about it, it will eat into the police budget. I believe that pensions account for 17 per cent. of my authority's budget, and that that figure is expected to rise to more than 20 per cent. That is an enormous top slice off money that can be used for operational work, and we must do something about it.
In conclusion, I feel that the Government has got the message, which does not relate only to funding; it is also an operational message. We must revisit some of the ways in which we allocate our police. We must also ensure an understanding that the high-profile stuff does not relate merely to a synthetic vision of policing in the past. It is important to build people's confidence, which is as important as—although not more important than—the way in which we use all the different means that are available of fighting crime more effectively.
10.37 am
Dr. George Turner: I start by congratulating the right hon. Member for South-West Norfolk (Mrs. Shephard) on the generally tempered and measured way in which she spoke about problems that, I suspect, have featured in my mailbag as much as in hers during the past several months. However, I hope that I may gently chide her, as I would like to have heard some words of apology for the fact that when she and her party had the opportunity to do more about the issues that she mentioned, they did nothing.
Mrs. Shephard: I am sure that the hon. Gentleman does not dispute the fact that police numbers have fallen under the current Government by 50 in Norfolk and by 2,300 in total.
Dr. Turner: I shall come to that point. I know that the right hon. Lady was not present last week, and I intend to briefly summarise, but not repeat, one or two points about that issue.
As a member of the Norfolk county council, which was responsible for the police budget for many years, and having been a member of the authority for a number of years, I know that we are discussing long-standing problems. I am pleased that they are being highlighted, as by emphasising them we can more quickly and firmly ensure that the Government addresses them. The problems of rural crime are not new and hon. Members who were in the previous Government should recognise that they provided the incoming Government with a poor heritage with respect to the resourcing of the police in Norfolk. I visited police stations throughout the county over the years and could have despaired about the resources—the lack of IT and good communications and, for most of those years, an argument about police numbers.
I suppose that it is the job of the right hon. Member for South-West Norfolk to criticise, but it is particularly inappropriate to say that the Government does not care about rural areas. It was because I represent one of the most rural seats in England that the Home Secretary went, on his first major expedition to East Anglia, not to Norwich but to King's Lynn. He told me that. He went there because he knew that I would be able to invite representatives from 60-plus parishes to meet him. As I reminded the House last week, he was chided by people with their bums firmly on seats in London about the pleasures of being in King's Lynn on a wet Friday night, when 600 people turned up to hear him and to give him their views on rural crime. The Minister, my hon. Friend the Member for Norwich, South (Mr. Clarke), came to the county earlier this year.
I know, from correspondence and discussion, that the Government do care about rural crime. However, I understand—and because I do I shall continue to press the Government about this matter—that there are many demands on resources. We shall have to continue, as the right hon. Member for South-West Norfolk did, to keep the issue before Government if we are to have a fair share of the resources. It is to the Government's credit that they commissioned a report to investigate the validity of rural areas' claims that they were under-resourced to an unfair degree. Almost every Member of Parliament says that the police in their constituency are

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under-resourced, but it is claimed that rural areas are unfairly under-resourced because previous Governments did not take into account the problems of sparsity.
I spoke about those challenges last week and do not want to cover them again, but they are problems for those who must police a large area, particularly when, as in my constituency, most crime is committed in the smaller, urban part of it. There are hundreds of square miles to cover, but much police effort is tied up by the crime in a small area, and that makes policing difficult. There are vehicle problems and Norfolk has difficulties in keeping 46 stations—one of the highest numbers in the country—open to the public.
Dr. Gibson: Will my hon. Friend also accentuate the positive with respect to the Norfolk police force? Will he mention their work with DNA technology and the marvellous way that they have solved crimes with the use of modern technology in the past few years? They have grasped the nettle and are leading the way in many of the new technologies. We should sing about that.
Dr. Turner: My hon. Friend does me a favour by mentioning the next issue that I wanted to raise. The matter was brought home when, last week, the debate was summarised as being about police numbers. I regret that I gave that impression because one of the key points that I wanted to make in the debate was that one can overemphasise the import of a number. The fact that modern technology provides the police with tools to increase their effectiveness has led the Norfolk police authority to divert resources. Lower police numbers are due not to lower funding, but to the fact that the local police authority and the chief constable have been trying to achieve better results with the resources.
We must understand that just raising police numbers is not the right way to help the public. We have to ensure that the public understand this argument. The new crime detection methods—and IT, which relieves the burden of paperwork and bureaucracy and provides clues, not because computers are more intelligent, but simply because of their greater crunching power—both free police time. We could divert the money needed for those to pay to have people parading up and down the streets although that would have less effect. The police authority is to be congratulated on facing up to that problem.
The Opposition will not help the debate if they continue to take a blinkered view. I accept the statement by the right hon. Member for South-West Norfolk that she does not want extra police numbers at the expense of technology. In a non-ideal world, the police and the police authority must balance these demands. We should give them our support and not criticise them if they choose not to adopt the sole measure of increasing police numbers.
Fear of crime in recent months has probably been a more important issue than crime itself. This situation reminds me of my mother. If my mother, a marvellous hypochondriac in her time, were asked several times whether she had a particular symptom, she could almost imagine that she had. One cause of the fear of crime is
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the asking of questions about it. If people are repeatedly asked, "Are you frightened to leave your home tonight? Are you frightened when you go down that dark lane without any street lighting to get to the local pub? Are you frightened by what has happened in Norfolk recently?" the result will be a heightened fear of crime. We must assess the public's view and take it on board, but we must also be careful that we reassure people. Rural crime has always existed. There has always been, and still is, less of it than in urban areas. Whatever our individual experience of crime, most of us for the most part are under no threat from the crime that we really fear—violent crime. The fear of violent crime is the greatest fear at present in West Norfolk.
While trying to discover whether my views are based on facts, I have had the opportunity to discuss the issue with senior police officers and officers on the beat. Yesterday, in preparation for the debate, I met the newly appointed chief superintendent for the division covering west Norfolk, Mr. Mike McCormack. The leaders and deputy leaders of the King's Lynn and West Norfolk borough council also attended the meeting, which made it more useful. The borough council is one of the key partners in the new crime and disorder partnership—the Safer West Norfolk steering group—which is taking forward the Government's proposals for closer working. We discussed the report on the first year of the partnership, which was recently submitted to the Minister. The meeting was helpful, and I hope that a formal meeting on the issues later in the summer will receive good publicity because it will reassure the public.
The participants at the meeting reminded me that, in addition to the beat base in Terrington St. John, which I mentioned last week, a beat office has been established in Great Massingham, in another part of my constituency. Although there have been teething problems in terms of the extent to which the office is used, its establishment shows how, when a parish council works with the borough council and the police, the available resources and police efficiency can be maximised.
I want to press the Minister on something that the Government should be doing now. Last week, the Minister promised me that the Home Secretary was working hard to ensure that rural policing received a fairer share of the nation's resources in the spending review for 2000, due to be announced in July. I do not expect to hear much more than a repeat of that promise in terms of the broader picture. Would the Minister be willing to consider whether there was a significant opportunity, especially given the publicity, to study a package of rural measures for the fens? A part of the area is in the constituency of the right hon. Member for South-West Norfolk, a part is in Cambridgeshire and a part is in Lincolnshire. Specific problems there could be addressed.
All those with responsibility for crime and disorder matters should consider whether more could be done in the way of property marking, home and farm watches and, in particular, the improvement of intelligence. Complaints are made about telephone calls taken centrally from remote areas. Rural intelligence officers might be appropriate, perhaps acting across county boundaries. They could serve a particular patch so that local telephone messages could by taken by people

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based locally, passing them to local police. I understand that we do not have a mobile closed-circuit television system because we are awaiting the outcomes of trials elsewhere in the country. I say to my hon. Friend the Minister that urgency on the matter would be helpful.
In closing, I hope that, even ahead of decisions to come later in the year, the Minister will be willing to consider some of the suggestions positively. I know from my discussions in Norfolk yesterday that the borough council and the local police would support such a rural package.
10.52 am
Mr. Owen Paterson: I apologise for turning up late for the debate. I had a misunderstanding with a horse at the weekend involving gravity and had to see the doctor.
Mr. Drew: The incident did not involve the hon. Gentleman's head?
Mr. Paterson: Hon. Members will be glad to hear that the diagnosis was entirely trivial.
I congratulate my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard) on bringing this important matter to the attention of the House. I come from a rural area. If I dared to break the Norfolk monopoly on the debate, I would further congratulate my right hon. Friend on being part of a Government who increased the number of police officers in the West Mercia area by 405 during her time in office.
I would like to address the problem of police numbers in the West Mercia police area. The Minister received a delegation of West Mercia Members in January, led by my hon. Friend the Member for Ludlow (Mr. Gill). The Minister will therefore know that West Mercia police is easily the worst off of all shire police authorities, receiving £103,127. Dare I mention that Norfolk receives £109,000 and that Cleveland receives £152,495? There is no doubt that West Mercia has the lowest expenditure per thousand of the population. The figures for central Government grant per head of resident population for West Mercia are striking when compared with those for surrounding police authorities. In West Mercia, the sum is £84.63; it is £92.38 in the area covered by the Dyfed-Powys police, £134.30 in that covered by the West Midlands police and £93.60 in the Staffordshire police area.
I could continue at length. I have given the Minister the figures. I stress that West Mercia is one of the largest areas. We have 2,866 square miles and just one police officer per 1,078 members of the population. That is about the lowest ratio in Western Europe. As the North Shropshire Neighbourhood and Farm Watch Association asked,
Is it not about time that residents of the three counties forming West Mercia, who all pay the same rate of income taxes as the rest of the country, had a far better deal out of this Home Secretary and the Home Office?
When we saw the Minister, we were told to hang our hats on the crimefighting fund. We have already lost 78 policemen in West Mercia since the election. There was great disappointment when, of the 36 new posts applied for, only 18 were granted, so we are 60 policemen short—despite the fact that the Government
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acknowledged that there are problems in delivering policing in rural areas and commissioned ORH Ltd. to report on the cost created by the extra travel times and communications difficulties and the need for extra police stations. The report recommended that the sparsity factor in rural areas be taken into account.
I hope that the Minister will respond to that issue. Why did the Government commission that report from an independent company and then stick it in a drawer? Why have the Government not acknowledged the report's recommendations, which would have given West Mercia £2.3 million extra? There is a real danger that the contract between the citizen and the state—whereby the citizen pays his taxes and hands over responsibility to the state to maintain law and order—may be breaking down.
Following the high-profile debates that took place after the incident in Norfolk, I went to Oswestry market last week. As I went around the town, I was astonished to learn how many people's houses or shops had been broken into. I was also astonished to discover that many people had not reported the incidents to the police and, importantly, that they had threatened intruders with weapons. That is extremely worrying. There is a danger that, unless the developing vacuum is dealt with, people will begin to take the law into their own hands, either through vigilantism, which has already been mentioned, or by employing private agencies. I have addressed councils on that issue, and they all say that they would like more policemen. However, there are 98 villages in my constituency, and it is highly unlikely that, with any Government, there will be adequate policemen to cover them.
I want to make one suggestion; parish councils should be allowed to finance security men out of their precept. That has already been done in St. Martins, an ex-mining village that has experienced law and order problems. In that village, where an ex-policeman was employed and put in a smart uniform, a considerable amount of trivial, tiresome street crime disappeared because there was someone on the spot who knew the locals, could spot strange cars or ne'er-do-wells coming into the village and could keep in close contact with the police. The system worked extremely well but, for reasons that I shall not go into, it was stopped, and West Mercia has employed a community policeman, who is based in a supermarket in the village. However, there is real merit in considering the use of security men, funded by parish councils, who can liaise closely with the police—an idea that is supported by the senior policemen to whom I have spoken. I should be interested to hear the Minister's reaction to that.
10.57 am
Mr. Colin Breed: I believe that there is a large measure of agreement between members of all parties who represent rural areas. Rural crime certainly is not new, but perhaps it is now being highlighted and it is increasing—partly, I suspect, due to the population shift. More people are moving into rural areas, so it may not be surprising that there is an increase in rural crime.
I suspect that most people and most parish councils want, not more policemen, but less crime, but they imagine that by having more policemen, there might be

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less crime. There is no doubt that the police are stretched and are being stretched further. The sparsity factor has been mentioned, and I hope that the Government will recognise the need to do something about it because it is clearly affecting the ability of the police to provide the sort of service that they want to provide in rural areas.
Those hon. Members who represent holiday locations will be aware of the problem of the seasonal increase in crime due to tourism. We enjoy the benefits of tourism, but it means that the police are stretched even further, and, with the inevitable traffic jams, response times become even worse, which does not make it easier for the police to attend incidents.
I suspect that every hon. Member who has visited a police station and spoken to policemen recently would confirm that one of their biggest moans is about the amount of paperwork that they have to do. I am unsure whether that problem has been tackled vigorously enough in recent times.
My part of the world, the south-west, has also seen the confluence of some unusual happenings. Two lengthy murder inquiries are under way, and have absorbed an enormous amount of police time and money. When unusual events happen together and resources are already stretched, that can make life exceptionally difficult.
I, too, have heard representatives of towns suggest that they may contract private security firms, but, as a former local councillor, I must say that that is slippery slope. Why should people have to pay additional council tax on top of other taxes in order to provide additional policing support? I can understand why councils in some areas believe that that is the right approach, partly because major problems are experienced at certain hotspot times and in certain hotspot places. Many of the problems experienced in our towns and villages occur exclusively on Friday and Saturday nights at certain locations, which most people could readily guess. It is more difficult to police at particular times in particular places: half a dozen towns may all experience Friday and Saturday night problems. Town and parish councils feel that if they could only have extra support for five or six hours at certain times of the week, they could protect the premises, the flowerbeds, the toilets and so on, which are often the target of vandalism at night.
May I offer several suggestions for the Minister to consider? First, Devon and Cornwall has the largest special constabulary and it certainly does a tremendous job. However, the time has come to reflect on how it operates and functions on a voluntary basis. It may be time to place the special constabulary on a more retained basis, as with many of the fire brigades in the south-west, so that chief constables may direct people when and where they are most needed and gain real value for money out of the training costs. I realise that the whole basis would be changed and that arguments about the merits of a two-tier force would be raised, but the special constabulary provides a means of improving community policing.
Secondly, the centralising of control rooms initially caused problems. It has improved, but many control rooms remain remote, particularly in rural areas where addresses are not complete. Some villages share the
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same name and there is an inordinate number of houses and farms with the same name—and a postcode is seldom provided. An experiment with the Post Office is taking place in my constituency because there is a raft of people with the wrong postcode. Satellite references are being examined. Satellite navigation is becoming prevalent in many areas, so we could consider giving proper reference points to remote locations to enable the police to attend such places without having to drive around the countryside looking for lights, balloons on posts or white towels on gates.
Thirdly, we should look further into Crimestoppers, which has already been successful and could be developed further. My hon. Friend the Member for Colchester (Mr. Russell) has obtained an Adjournment debate tonight on that very subject, so I hope that it will tease out further ways of supporting Crimestoppers.
Fourthly, planning is important. We must try to introduce into the planning system some of the defensive schemes that have been developed for older people's housing. Much of the fear about which we hear is undoubtedly related to the rowdyism and vandalism that occur around people's homes. We could look into that. I should also like wardens to be employed for older persons' establishments once more. The movement to electronic alarms has not helped to give people a feeling of security. I realise that that option was chosen for all sorts of budgetary reasons, but I believe that the physical presence of wardens on older persons' developments is far more reassuring than electronic alarms.
Some businesses invest significant moneys in crime prevention on their premises—the electronic tagging of goods, CCTV cameras and so on—only to find that, when they have caught people trying to leave their premises with their ill-gotten gains, the police decide not to prosecute, perhaps because the value is too trivial, or perhaps too high. Business people almost feel that there is little value in investing in security equipment. The police often give little thought to prosecuting offenders. They need to respond more positively to people who invest their money in security systems.
The hon. Member for Stroud (Mr. Drew) mentioned radio communications, as I intended to do. I do not know what the cost will be. However, we know that a certain windfall of £22 billion has come to the Government's coffers by way of the sales of mobile telephone licences, and I suspect that only a small fraction of that amount would be required to cover the cost of communications by radio. There is a certain synergy between the aspects of mobile telephone promotion and the upgrading of the police radio system.
Finally, the subject of access at night is being considered in the Countryside and Rights of Way Bill that is now passing through the House. The Government should consider that carefully. Many people who live in the countryside are worried about people's reasons for wanting access to land and around properties at night. They fear that it might not be for their general enjoyment alone but for other purposes. I hope that, even at this late stage, the Government will reconsider that provision.
Like every hon. Member present, I want the police to be given greater resources—as do the general public. Whether resources go into physical bodies or to other

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purposes, people must be confident that their fears are being addressed, that crimes that they have experienced are being tackled and that the police have the resources that they need to reduce crime and the fear of it.
11.8 am
Mr. Oliver Heald: We have had an excellent debate. I congratulate my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard) on securing it, and on the firm and reasoned stand that she has taken on rural crime. Many people throughout the country appreciate what she is doing, which is why so many of them have written to her expressing their deeply felt concerns.
We have heard a range of speeches; I shall comment on some of them. The final point that the hon. Member for South-East Cornwall (Mr. Breed) raised was about access to the countryside at night. He may remember that the former Prime Minister, my right hon. Friend the Member for Huntingdon (Mr. Major), writing in The Field, pointed out that the right to roam could in certain circumstances become a charter for rural crime, reminding us of how many people's houses or gardens backed on to open land on village edges. That makes the point that at night, access to the countryside—a fine ideal—can have particular dangers in rural areas.
I pay tribute to the police for their work. Their job is not easy, and they show tremendous bravery and courage on occasions. The police also give us a great deal of reassurance. Obviously, criticisms can be made and must be answered, but it should never be thought that we do not support the police in their work.
Yesterday's crime figures bring into focus the worrying background to the debate. The figures cover the full calendar year up to the end of 1999, when crime levels rose for the first time in six years. The statistics also show that the rise in recorded crime is gathering pace. The situation was alarming in September, and now it is worsening. For the 12 months to the end of September, crime rose by 2.2 per cent., but for the full calendar year to December, it rose by 3 per cent. The Home Secretary's so-called crusade against crime is failing.
The figures will cause concern everywhere, but especially in rural areas. It is particularly frightening to be the victim of a crime in a remote place, because neighbours are at a distance and there are concerns about the police's ability to respond. Victims feel isolated in a way that they do not in a town. The figures also confirm the anecdotal evidence that we have heard in the debate, and which has been building in the past year. In his excellent contribution, my hon. Friend the Member for North Shropshire (Mr. Paterson) explained that people in Oswestry feel that crime is increasing and that the police are not providing adequate redress.
At the royal show in Stoneleigh on 5 July 1999, it was revealed that rural crime is costing farmers and landowners more than £100 million a year. NFU Mutual said that 30,000 vehicles worth £73 million disappeared from farms and country homes last year, and that farm machinery worth £14.2 million and livestock worth £4 million were lost.
Sid Gibson of the Mutual said that he was concerned about the fact that rural crime was not falling, and he made some suggestions. Colin George, a representative
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of a rural security company, blamed the removal of police from villages. In late August, the Martin case occurred. David Barnard, an Upwell parish councillor, told his local paper that crime had reached crisis point in seemingly tranquil fenland villages. In Wisbech, which has the third-highest per capita crime rate in the country, the police station is now closed in the evenings.
On 3 October, the BBC report on rural crime painted a worrying picture. It surveyed 120 farmers, of whom 55 per cent. had suffered burglary in the past year, 30 per cent. had been abused, 45 per cent. had encountered vandalism and 20 per cent. had experienced arson attacks. They were frightened. In the House, we have held debates that highlighted rural concerns. My right hon. Friend the Member for South-West Norfolk pursued the issues on 19 October, and my right hon. Friend the Member for East Devon (Sir P. Emery) did so on 2 December. They both talked about the problems of rural areas and the fact that 14 police authorities had written to the Home Secretary to say that rural police authorities were disadvantaged because of insufficient recognition of the extra costs of sparsity.
Why has that happened? The hon. Member for Stroud (Mr. Drew) cited the problem in his local village, where the local police officer, Jim Gregory, will not be replaced, and the hon. Gentleman set out his concerns about that. We should not forget the background in Gloucestershire. Since the general election, funding has decreased by 3 per cent., which means 35 per cent. fewer officers, and in the past year crime has increased by 4 per cent.
The hon. Member for North-West Norfolk (Dr. Turner) explained that in his constituency there were problems with the visibility of officers; he tried to make the case that the Government were not to blame, but one cannot ignore the fact that in Norfolk, police numbers are down by 50 and crime is up by 665 offences. The hon. Gentleman should accept that there is a relationship between the number of officers and increased crime. He argued that officers should be used more efficiently and should have equipment of good quality, and no one would argue with that. But one cannot get around the fact that if everything is run efficiently and there are more police officers, more criminals are caught and the public are reassured.
Dr. George Turner: Will the hon. Gentleman admit that the Government inherited a situation in which the initial support services in Norfolk were extraordinarily badly funded? It was therefore courageous of the chief constable to tackle those issues.
Mr. Heald: It is all very well to argue, "Oh well, it was all terrible then," but at the last general election the hon. Gentleman stood on a platform saying that things could only get better, when the sad fact is that in Norfolk, they have got worse. The chief constable said that he wanted 400 more officers, although that figure was reduced to 90 in the crimefighting fund bid and he got only 66—two thirds of what he asked for.
Police numbers are a serious issue; funding should be provided to restore them to the numbers that existed at the general election—an extra 2,300 officers. There should be greater visibility of officers in rural areas; my

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right hon. Friend the Member for Maidstone and The Weald (Miss Widdecombe) unveiled her plan for officers on the beat to stop in shops and other public places to do their paperwork, to increase their visibility. Work should be audited so that we know what can be done most efficiently and effectively by police officers and what non-essential tasks can be done by civilian staff.
Under the Conservatives, police numbers increased by 15,000 and civilian numbers from 4,000 to 53,000, which allowed the police to do their work—
The Minister of State, Home Office (Mr. Charles Clarke): Crime doubled.
Mr. Heald: The Minister says that crime doubled, but we turned it round; there were five years in which crime fell. [Laughter.] How can anyone laugh when, after five years when crime fell, it has started to rise again and the pace has built up, so that in September last year it was rising by 2.2 per cent. and now it is rising by 3 per cent? Where will it end?
The Minister must take the reasonable steps that we suggest. Although there may not be a direct correlation between police numbers and crime detection, there is a clear correlation between fear of crime and the numbers of police, who provide reassurance if their efficiency is maintained.
It is time that the Minister listened. We have had enough of the ORH report being put on the shelf and enough of, "Oh yes, we will do something about police pensions some day." The fact is that some day has come; we want answers and action now. The time for all talk and no delivery is over; the thin blue line cannot be stretched any thinner.
11.19 am
The Minister of State, Home Office (Mr. Charles Clarke): I congratulate the right hon. Member for South-West Norfolk (Mrs. Shephard) on securing the debate. She has shown a consistent interest in this subject. I agree with the hon. Member for North-East Hertfordshire (Mr. Heald), who described the way in which the right hon. Lady spoke as firm but reasoned. She expressed her thoughts in a positive and constructive way, which contrasts with the intemperate style of her party's current leader on those matters. Some members of her party might wish that she spoke for it on such issues instead.
My only quibble in terms of substance relates to the suggestion by the right hon. Member for South-West Norfolk that there is a lack of interest in rural communities in the Government. My hon. Friend the Member for Stroud (Mr. Drew) took up that point with her, and I am glad that he did so. I take very seriously the points made by the National Farmers Union, the Country Landowners Association and the Countryside Agency, to which she referred. In particular, I take seriously the issue of crime against agricultural businesses, which the hon. Member for North-East Hertfordshire mentioned. His point is correct. I note that many schemes, such as the farm watch scheme, have been positive. Nevertheless, the issue is serious,
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quite apart from the problems that arise from rural isolation and fear, which many hon. Members have mentioned.
Two debates have already taken place on this question in the past 10 days, and I do not intend to go over the territory that I covered in those debates. However, I will make a point about the general context. Some crimes are specific to the countryside, such as the theft of livestock and farm equipment. However, in the main, rural areas suffer much the same sort of crime as urban and inner-city areas. The level of general crime is usually lower in rural areas than in urban or inner-city areas. For example, statistics show that the levels of vehicle crime, burglary and violence in rural areas are roughly three quarters of those in urban areas and about half those in inner cities. Across a range of offences—burglary, mugging, car theft, theft from a car, rape and racial attacks—research shows that the fear of crime is also markedly less.
In an interesting interview with the Yorkshire Post, the chief constable of North Yorkshire recently stated:
Across North Yorkshire's largely rural two million acres we are driving crime down, year after year…
I prefer to see the crime figures as a form of recognition of the first-rate work done by the county's officers. They are working increasingly closely with…the community we serve.
I do not want in any way to diminish the point made by the right hon. Member for South-West Norfolk, because she is right to raise it in this way. However, it is important to establish the general context. As I said, we will publish a rural White Paper later this year. Our concern with crime in the countryside will be shown by the inclusion of a section dealing specifically with rural crime.
A large number of specific issues have been raised, to which I must respond. First, we accept the point about pensions. As I said last week, we are actively considering whether the matter can be dealt with nationally, rather than by every police authority separately, because the burden of pensions is distributed unfairly across police authorities.
I have only one quibble with Mr. Wilson, the chairman of Norfolk police authority, on best value. I believe that it is making a difference. It is improving the performances of all forces to the top quartile and thereby freeing resources for better policing. The right hon. Member for South-West Norfolk will be interested to know that the Government published last week a report by Clare Spottiswode, on the public services productivity panel, considering the possibility of varying the efficiency target instead of having a 2 per cent. efficiency target across all forces. We are considering that very positively, to try to find a more sensitive approach that better reflects the specific levels of efficiency in organisations.
On the police radio project, my hon. Friend the Member for Stroud is right that it makes a material difference to the police's ability to be in the communities that they serve. However, it is eccentric for Norfolk to suggest that the burden of paying for it falls on Norfolk specifically. Major criticisms have been made of funding, almost all from the main metropolitan areas. In general, most rural areas have acknowledged—for the reasons identified by my hon. Friend—that the project benefits rural areas and that the financial burden does

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not fall on them unfairly. I will discuss that matter with Mr. Wilson and the police authority, because he has also raised it in a letter to me. The issue is important, but I believe that he is wrong.
I have nothing to add to what I have said previously about sparsity. I have met representatives of a wide range of organisations, including all the relevant authorities from North Shropshire, Norfolk, Avon, Devon and Cornwall, West Mercia, and Gloucestershire, which are represented by people who have spoken in this debate. All those authorities are involved in the same consortium. Sparsity is being considered in the context of the spending review and there is a strong case for that. My hon. Friend the Member for North-West Norfolk (Dr. Turner) made the case about security in Gloucestershire and the same case can be made for Norfolk, which has Sandringham in its midst.
I shall not bandy numbers about any further, except to say that between March 1993 and 1997—under the Conservative Government—numbers decreased by more than a thousand across the country. Civilians are relevant. The example that I gave earlier about the loss of 49 police officers in Norfolk contrasts with an increase of 57 civilians, which is not atypical. Indeed, it applies across the country—
Mr. Heald: Will the Minister give way?
Mr. Clarke: I will not, because I am pressed for time and need to deal with a range of specific points.
The hon. Member for North Shropshire (Mr. Paterson) asked about parish councils. He made a powerful case. Parish councils are providing some funding. We are examining ways of increasing the role of parish councils. I have discussed with Church people in Norfolk how that could be achieved. Issues about specials and retained officers raised by the hon. Member for South-East Cornwall (Mr. Breed) could be considered within that context. It was right to highlight the importance of parish councils. As I said, we are examining ways of engaging more actively on that front.
CCTV is another important issue. We are attempting in several ways—including the use of mobile schemes of the type mentioned by my hon. Friend the Member for North-West Norfolk, and the linkage of cameras to central control rooms, which has proved effective in different areas—to ensure that it can be used more effectively in rural areas. We are also reflecting on fenland problems—in the context of the relationship between Norfolk, Cambridgeshire and Lincolnshire—to establish what is causing the difficulties there and to try to help rural partnerships in those areas.
I much appreciated the points about youth justice raised by my hon. Friend the Member for Stroud. It has been widely recognised and is making a material difference to the process. As to Minchinhampton, I am not familiar with the details, but I shall certainly ask the chief constable to write to my hon. Friend about the important matter that he raised. I shall not be tempted to comment on Crimestoppers because there is an Adjournment debate about it this evening, but I take it most seriously.
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On the right to roam, I was intrigued by the proposition that criminals about to break into countryside houses in the middle of the night will be deterred or encouraged by the right to roam. Those issues are not related in the way suggested.
As I said in a recent Adjournment debate, partnership is a key part of the solution. Joint use of facilities is important and I was interested to hear about the possibilities of police doing their work in shops, schools, supermarkets and so on. We are actively discussing and seeking to encourage that in our review. There should be better use of joint facilities—church halls and schools, for example—to bring about a more tangible police presence locally.
We are also considering the roles of special constables and retained officers in the context of helping to develop local partnerships; and we are examining targeted policing to identify the hotspots. My hon. Friend the Member for Stroud made a good point about known criminals in particular localities. We wish to encourage better watch schemes. Farm watch schemes, for example, have been effective in dealing with some of the problems raised by the hon. Member for North-East Hertfordshire and the National Farmers Union. More effective alarm schemes and wardens are also important initiatives.
I mentioned technology. In addition to the police radio system, the national strategy for police information systems is important for getting rid of paperwork and developing better intelligence. Reference was made to abstractions of police for training or servicing the criminal justice system, which causes problems for local policing. I repeat what I said to the Association of Chief Police Officers: it is important that it, the police and the community as a whole give evidence and submissions to the inquiry on the reform of the criminal justice system, to which the Government give high priority. Debates should not be dominated by lawyers alone. The criminal justice system is relevant to the police and everyone who uses it. We must achieve a more efficient system for community safety. Changing the criminal justice system so that it places fewer burdens on the police and others is an important element of the process.
The debate has opened up the issue of self-defence and reasonable force. I commend what the shadow Home Secretary initially said on that matter:
At the moment, I have yet to be persuaded that the law is at fault, because the law says you can use reasonable force.
Sir John Evans, the chief constable of Devon and Cornwall and president of ACPO, and many other police spokespeople have confirmed that position. The editor of the Police Review said:
Worst of all is the dangerous knee-jerk reaction to Martin's conviction. William Hague, to his eternal shame, has sought to make political capital out of this tragedy by calling for a change in the criminal justice system.
That is a widely held view. I hope that more Conservatives will align themselves with the right hon. Member for South-West Norfolk, who secured the debate, and the firm and reasoned tone in which she has expressed her arguments, than with their party leader.
Madam Deputy Speaker (Mrs. Gwyneth Dunwoody): Order.

Ancient Woodlands
11.30 am
Mr. Gareth R. Thomas: Brands Hatch, the home of British motor racing, wants to destroy 37 acres of ancient woodland to create new facilities for the 2002 British grand prix. I am a motor racing fan. I relished the performance of David Coulthard when he won at Silverstone two weeks ago and delighted in the driver's world championship victories of Damon Hill and Nigel Mansell. However, the home of British motor racing should not be allowed to desecrate ancient woodland to build, among other things, a new media centre, a helicopter pad and new car parks.
Brands Hatch has owned the 37 acres for many years, using the area for off-road racing. At present, anyone who owns a wood under what are called permitted development rights can race cars in ancient woodland for up to 14 days a year. That can cause considerable damage. In its application for the new development, Brands Hatch claims that its rally school—for which it presumably received planning permission—operates not just for 14 days a year, but for 140 days a year.
Brands Hatch is just the highest-profile case. I have consulted Woodland Trust, which says that at least 35 other ancient woods are under serious threat. Ancient woods are one of the great irreplaceable and unsung glories of Britain's natural heritage. They are nature's cathedrals—timeless places of great beauty and tranquillity. A wood can be somewhere to head for, a place to stop for reflection on an evening's stroll and an indicator of the changing seasons. The bluebell-carpeted wood remains a timeless image advertising the beauty of our countryside.
Because they have long been undisturbed, ancient woods are often historical treasure troves. Bronze and Iron Age earthworks, ancient park boundaries or charcoal pits and kilns provide clues to past land use and local industrial history. As the habitat most representative of our original, natural, stable conditions, ancient woodland is home to more threatened species, such as the bluebell, than any other habitat in the United Kingdom. At least 45 woodland species became extinct during the past 100 years. Many remaining species, such as the wood anemone or Soloman's seal, which are found only in ancient woodland and have limited powers of dispersal, are struggling to survive.
The UK biodiversity action plan states that broadleaf woodland, which forms virtually all the ancient woodland in the UK except for the Scots pine forests of Scotland, supports almost twice as many UK biodiversity action plan species than any other habitat. Only 309,000 hectares of ancient semi-natural woodland survive in England, Wales and Scotland. That is just 2 per cent. of the total land area. In Northern Ireland, no accurate records exist. Roughly 50 per cent. of Britain's ancient woodland has been lost since the first world war, mainly through conversion to conifer woodland and clearance for agriculture. Development pressures, the channel tunnel rail link, the Newbury bypass and countless well-known road schemes have destroyed or threatened areas of ancient wood. Increasingly, ancient woodland is found in small fragments—islands of biodiversity in a hostile landscape of intensive agriculture and urban sprawl.
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I am lucky to have a fragment of ancient woodland in my constituency. I became familiar with Pinner wood during my time on the excellent Pinner Wood first and middle school governing body. The wood occupies almost the whole central portion of the beautiful Pinner Hill golf course and includes one of the oldest oak trees in Middlesex. I am told that the wood, formerly linked to other nearby areas of ancient woodland just outside my constituency, is a valuable nature conservation area, with excellent examples of oak and pollarded and coppiced hornbeam. Bridge pond in the woods is noted for its great crested newts and its rich variety of waterside and aquatic plants, including water plantain and white water lilies. A range of plant species that were previously recorded in the woods are now sadly extinct, including the frog orchid and the violet helleborine. Even in 1547, Pinner wood was 127 acres in size. By the time of enclosure in 1817 it was down to 26 acres and it now measures just two hectares. Not far from Pinner wood is Pinner Park farm, also in my constituency, which stands on the site of a former 100-acre ancient wooded enclosed hunting area. All that remains are the deer park boundary, which still awaits appropriate designation, and a relatively small number of trees. That is an example of the fate that has already befallen so many areas of ancient woodland.
Three broad threats to our ancient woods remain: their size, climate change and a series of legal loopholes. Some 80 per cent. of all ancient woods are less than 20 hectares in area, and 44 per cent. are between two and five hectares. As there are many ancient woods of less than two hectares not included in the current inventory, most ancient woods may be less than two hectares.
The trend towards smaller, more isolated woods has had several important consequences. Large areas of woodland are more valuable for wildlife than small areas. The size of woods is important because of the direct relationship between size and the number of species that can be supported. In addition, all species need a certain minimum area to breed and feed successfully. Core area is an important concept for ancient woodland. The edges of woods are more liable to fluctuations in the environment caused by wind and temperature and are more vulnerable to pollution such as pesticide spray drift. Many species specific to ancient woodland are unable to tolerate that edge effect and require the relative stability of the core of the woodland. The size and the shape of the wood affect the relative amounts of core area and edge. In addition to outright clearance of woodland, habitats between woods and other semi-natural habitats, including hedges, have been lost. Large arable fields have created barriers to migration. Improved grassland, pesticide drift, fertiliser migration in ground water and deep ploughing near trees have all taken their toll.
Perhaps the greatest long-term threat to our ancient woods, assuming that we are able to protect them from further development and fragmentation, is climate change, which is increasingly recognised as a major and as yet unquantifiable factor that will affect all of us in the future. There is already overwhelming evidence that climate change is happening. That creates particular dangers for ancient woods. The environmental stresses caused by summer droughts will make trees more vulnerable to disease and frost-free winters may prevent

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invernisation—many trees need winter cold to reset their clocks for spring and for the germination of seeds. It could also bring about increases in insect pest populations and bring over new pests from warmer climates, which may be able to survive all year round, as well as causing changes to flowering times, the nesting of birds or the emergence of insects, which may disrupt ecosystem functioning. While species may be able to migrate in response to climate change, many ancient woodland species are very sedentary, and migration of whole habitats will not be possible. The cumulative effect of all those impacts could be serious for ancient woods.
Existing legal loopholes include failures of the current sites of special scientific interest system. Some 85 per cent. of ancient woodland, including five of the 12 largest ancient woodland sites in England, lack SSSI or any other designation. Because sites are selected on the basis of a representative sample, many high quality sites fall outside the protection offered by SSSIs. In any case, current SSSI legislation cannot prevent landowners from neglecting woodland. We need to re-examine permitted development rights, which, when exercised for purposes such as scrambling, four-wheel drive vehicle racing or caravan holiday use, can damage ancient woodland. The removal of trees can be claimed to be necessary for such activity, since no felling licence is required for felling necessary for development that is deemed to have received planning permission, as in the case of permitted development.
The current felling licence system is another loophole. To be covered by a felling licence, trees must have a minimum diameter of 8 cm, so it is possible to remove young trees, shrubs and undergrowth from woodland. Up to 5 sq m of timber every quarter can also be extracted. When those two factors are exercised in parallel, they can severely degrade a wood in just a few years. As an aside, I point out to hon. Members that Northern Ireland has no felling licence controls. The tree preservation order system, which is not especially strong in England, is also much weaker there.
Policy on ancient woodland has moved a long way in the past three years. The remaining area of ancient woodland is one of 150 indicators of sustainable development outlined in "A Better Quality of Life: A Strategy for Sustainable Development for the United Kingdom", which was published last year. The England forestry strategy, which was published in 1998, also recognises the importance of ancient woodland. However, other positive measures are needed to close a series of legal loopholes. We must increase protection for sites of special scientific interest. The Countryside and Rights of Way Bill offers an excellent opportunity to strengthen protection for SSSIs, including ancient woods. We should also contemplate the creation of a new form of conservation status for important habitats outside the SSSI system through the creation of local wildlife sites. Stronger references to ancient woodland must be included in planning policy guidance. We should also consider improving the tree preservation order system and introduce felling licences in Northern Ireland.
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As the last update to the planning guidance to local authorities on trees and woods was made more than 22 years ago, new and updated formal planning guidance to local authorities should be provided. We should review existing permitted development rights and rescind those that damage ancient woods. The Government are already committed to tackling the legacy of past land management policies, but several other specific steps might also be taken. A carefully targeted woodland creation programme could link ancient woods in areas where there is a high density of sites. That would increase the area of ecologically sustainable woodland. The farm woodland premium scheme could also be fundamentally reformed to ensure that woodland creation was targeted and supported planned expansion.
Urgent research should be undertaken into techniques and priorities for restoring ancient woods planted with conifers. We could also ensure that environmental payments to farmers were dependent on whole-farm plans that included sound management of hitherto neglected farm woods. In addition, we could argue for increased support for forestry and woodland expansion through European Union negotiations, based on the specific case of the United Kingdom's low woodland cover and low amount of ancient woodland. We should continue to encourage the take-up of environmentally responsible management of woods and forests through active support for the UK woodland assurance scheme and for Forest Stewardship Council certification schemes.
The Government are already working hard on a number of fronts in relation to climate change. We must continue to champion stronger support for renewable energy and energy efficiency in transport, homes, offices and industry. We need to recognise the role of carbon offsets in reducing the severity of climate change and to promote the value of woodland in helping to increase stored carbon by protecting the existing resource, increasing the rates of planting new woodland and using wood fuels rather than fossil fuels. Support is also needed for action intended specifically to protect ancient woodland from the worst effects of climate change by extending existing woodland areas and creating large areas of new habitat on a sufficient scale to sustain wildlife in the face of potentially rapid environmental change.
Size matters here. The Greater London area has some 2,203 hectares of semi-natural ancient woodland, 30 per cent. of which is found within the borough of Bromley alone. Before this debate, I consulted Trees for London, which told me that much of the tree planting in central London dates from Victorian times. Plane trees are particularly efficient at hoovering up carbon dioxide pollution. Thanks to the Victorian legacy, they are dotted along Park lane and other places, but I am told that those trees now need replacing. I hope that the mayor and the Greater London Authority will address that issue, in partnership with a range of other bodies and as part of an urgently needed strategy for London's trees and ancient woods.
Ancient woodland is part of our heritage. It is a crucial habitat for many species and is vital to the biodiversity of our nation. The Government is already committed to tackling many of the legal loopholes and land use and planning policy issues. I hope that my hon.

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Friend the Minister will be able to add a new sense of urgency and champion the need for new planning guidance, a greater protection of sites of wildlife interest and the use of grant aid to target action for strategic woodland creation. Is it not time that we drew a line in the sand with regard to Brands Hatch and said that enough is enough? We do not want part of our heritage replaced by a new car park and media centre.
11.44 am
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin): My hon. Friend the Member for Harrow, West (Mr. Thomas) made a good speech on an important issue and raised many points, to which I will do my best to reply. The Government share his view of the value of ancient woods. I do not claim that it is possible or. in some cases, desirable to create a system that protects such woods from all threats. However, we have taken a wide range of measures to protect them, as my hon. Friend acknowledged, and further measures are under consideration.
My hon. Friend mentioned Brands Hatch. The application to which he referred is before Sevenoaks district council. The question of the loss of ancient woodland will be initially for the council to consider. The application, should the council be minded to approve it, will be referred to the Secretary of State as a departure from the development plan. He will have the opportunity to call in the plan should he see fit. My hon. Friend will therefore understand that I cannot comment further on the matter for the time being.
My hon. Friend drew attention to the way in which the planning system deals with ancient woods. Land use planning plays a positive part in protecting trees and woodland in areas formally designated for their nature conservation value. Where there is no specific designation, the decision on priorities is deliberately left to planning authorities. That reflects the planning system's essential role as a tool to be used by those best able to take a balanced view of all the local considerations. Within that framework, planning policy guidance emphasises the importance of safeguarding the character of the countryside, of which ancient woods are an important element. It also suggests that local authorities should identify sites of local conservation importance, such as ancient woodlands, and include appropriate policies in their development plans.
The forestry forum is reviewing, among other matters, the existing guidance on trees and woods. The forum provides an opportunity to consider whether amendments to offer further protection to woods might be needed. My hon. Friend may be assured that the Government are aware of the arguments and will give them careful consideration. He might be interested to know that we recently added the Forestry Commission to the list of non-statutory consultees for planning applications involving ancient woodlands. That change is important and should ensure that local planning authorities have access to proper advice on the significance of threatened woods.
My hon. Friend referred to the need to take direct measures to protect and expand forest cover. I am pleased to say that the Forestry Commission is
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developing a new challenge fund aimed specifically at reversing the fragmentation of ancient woodland. Its revised woodland grant scheme rules will increase the grant aid for planting that defragments ancient woodlands. I do not like the word "defragment", but it is on my brief.
The use of local native species is widely supported, within practical limits, by the Forestry Commission and English Nature. The Forestry Commission encourages owners of ancient woodland to restock using natural regeneration where possible, or plants of local provenance if not.
The England rural development plan includes several funding measures that should benefit forestry. For example, there will be a 26 per cent. increase for the woodland grant scheme, bringing total expenditure over the planned seven years to £139 million. There will be a 37 per cent. increase in the farm woodland premium scheme. The adoption of the UK woodland assurance scheme is also strongly endorsed by the Forestry Commission, which, of course, was largely instrumental in developing it. My hon. Friend mentioned the situation in Northern Ireland, but I am sure that he appreciates that I cannot deal with that.
The most serious issues relating to SSSIs are neglect and inappropriate management. The Countryside and Rights of Way Bill will introduce management notices, which will be a useful tool to combat neglect. Other measures include conservation objectives and management schemes. The Bill will also introduce stronger controls over the exercise of permitted development rights by proposing that such operations may be carried out only with the consent of English Nature. The Bill will be complemented by revised guidance on planning for nature conservation and biodiversity.
It is true that the small size of ancient woodlands often means that they may not qualify to be notified as SSSIs. The local sites review group has been taking views on the identification, protection and management of such local sites. The group has submitted its initial report to the Department and we are considering the most appropriate way forward.
Any application for a felling licence for trees protected by a tree preservation order is handled by the Forestry Commission, in consultation with the local authority responsible for the order. If, after consultation, a felling licence is granted, the tree preservation order is overridden, but that is not a loophole. If the local authority objects to the Forestry Commission's proposal to grant the licence, the application is taken out of the commission's hands and transferred to my Department. The provision for a small licence-free quota, to which my hon. Friend referred, is seen as providing a reasonable balance between controlling felling and allowing small-scale woodland management without excessive bureaucracy.
It is the Forestry Commission's policy to prosecute wherever there is clear evidence of a serious breach of felling controls. In 1998–99, 337 cases of alleged illegal felling were reported to, or discovered by, the Forestry Commission. Investigations revealed that in 112 of those cases there was prima facie evidence that the regulations had been broken. In the same year,

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17 prosecutions were brought and formal warnings were issued in 23 cases. A further 15 cases had still to be resolved.
Protection from felling in cases that do not involve development has been recently improved considerably by the environmental impact assessment regulations introduced last year. Any proposal to remove ancient woodland of more than one hectare will need a formal determination by the Forestry Commission as to whether an impact assessment is required. Where it is required, the commission will consent to deforestation only if the assessment shows that it will not have a significant effect on the environment.
As my hon. Friend said, climate change is a threat to woodland. A considerable amount of research is being done on the issue, one of the fruits of which has been a paper produced recently by Forest Research on the impact of climate change on trees. It suggests a range of possible effects, including faster tree growth in some regions and more severe damage by larger numbers of pests. It is too early to reach conclusions on the overall significance of climate change or on the measures that may be required to deal with it, but an integrated model of forest productivity that takes the various factors into account is now being developed.
The Government's draft climate change programme, published on 9 March, sets out a range of policies and measures for promoting better energy efficiency and new technologies. We have set a target to provide 10 per cent. of the UK's electricity supplies from renewable energy sources by 2010 and we want to encourage other more efficient ways of producing energy. For example, we have a new target to double the capacity of combined heat and power to 10,000 MW by 2010.
We also recognise the role of carbon offsets, to which my hon. Friend referred. In our draft climate change programme, we announced that we would encourage
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UK-based carbon offset projects that promote renewable energy, energy efficiency measures and forestry. The recent coppice-burning project successfully demonstrated one aspect of the potential for renewable energy.
In general, the Government accepts that intensive agriculture continues to have a deleterious effect on wildlife. I cannot do justice to such a large subject today, but we are far from complacent and have put in place a considerable number of policies and practices to reduce its damaging effects, as well as incentives to encourage environmentally friendly farming. Measures are in place to control, among other things, the storage of silage, slurry and agricultural fuel oils and to ensure that Environment Agency authorisation is needed for the disposal of hazardous substances such as sheep dip and pesticide waste to avoid damage to species and adjacent habitats.
A range of financial incentives is in place to encourage better management, notably the substantial increase in support for agri-environment schemes in the England rural development plan. More than £1 billion will be spent during the seven years of that plan, including £566 million for the countryside stewardship scheme, £334 million for environmentally sensitive areas, and a threefold increase to £134 million in funding for the organic farming scheme.
As I said at the outset, the Government recognise the value of ancient woods. I hope that I have demonstrated that we have taken and are continuing to take a wide range of measures to protect and expand them, as well as to protect the wider natural environment of which they are a part. I hope that my hon. Friend agrees that we have a good story to tell. No one is under any illusions about the scale of the problem, but it is being addressed.

Tourism (Southend)
11.57 am
Mr. David Amess: I am a born optimist, Madam Deputy Speaker, so I hope that by the end of this short debate there will no one in this country or overseas who will not wish to visit Southend. It is a truly magnificent seaside resort.
Following the events of last Thursday, I hope that I shall be allowed to be somewhat self-indulgent. Local Conservatives fought the campaign on the slogan, "Wake up Southend". From my biased political perspective, Southend did wake up. Before Thursday's elections, the Conservatives were one short of a majority. There are now 25 Conservative members and 14 opposition members. Sadly, every one of the Labour party's candidates was defeated, and only two of the eight Liberal Democrat candidates were successful. A huge change has taken place in the politics of Southend.
Although many local people seemed to think that the council was still Conservative, it has not been so for six years. The Conservatives made any number of promises during the election and they are beholden to try to keep those promises. They dare not let the people down. We are taking over at a difficult time in Southend, just as the incoming Labour Government claimed that they were taking over the country at a difficult on 1 May 1997. I pay tribute to all those who have worked to promote the town as a seaside resort. It is a wonderful tourist attraction.
So proud are we of the town that we invited Her Majesty the Queen to visit us for the first time a few months ago. We are not permitted to repeat what members of the royal family have said, but her radiance when she and her husband arrived on the seafront to be greeted by hundreds and hundreds of schoolchildren said it all. She thoroughly enjoyed her visit to Southend. If Southend is good enough for the royal family, I suspect that no one could fail to enjoy a visit.
Over the years, Southend local authority has adopted a number of strategies to promote tourism. Traditionally, one of Southend's main roles was that of a seaside resort for staying and day visitors. At one time, it was said to be the second-largest resort in the country. Tourism gave the town much of its impetus for growth during the late 19th and the first half of the 20th centuries. It stimulated investment, employment and development, especially along the seafront. It gave Southend considerable status nationally and it encouraged migration into the town with the consequent expansion of housing, retailing and other facilities.
Of course, things have changed dramatically. Whereas some years ago 5 million people used to go abroad for their holidays, the figure is now in excess of 27 million. No seaside resort is nearer to our capital than Southend. It does not take too long to get there on public transport: 40 minutes on either the Fenchurch Street or the Liverpool Street line. If one is feeling depressed by the grind of the city, in no time at all one can be in an environment that will lift the spirits. Southend has a wealth of culture. It has singers, dancers, painters and sculptors. We have magnificent local talent, much of it inspired by the sea.
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I am a Londoner. I was born here. I love London. When I was a child my parents used to take me to Southend for trips along the pier, which is the longest in the world at 1.33 miles. It is a magnificent attraction. I also used to be taken to Leigh to enjoy shellfish and one of the two finest ice creams in the world at Rossi's and Tomassi's. There is a bit of an argument in the town about who has the best ice cream and as I am friendly with both families, I will say no more. I found all those things very attractive as a child.
Given the 14 years that I spent somewhere else, I would never have believed it if anyone had told me that I would represent the place where I was taken as a child. However, it was a different sort of seaside resort then. Going abroad was something for the very well heeled. It was not within the aspirations of ordinary people.
The town has spent a great deal of time developing a tourism strategy. The Labour party applauds strategies, so that must find favour with the Government. British seaside resorts experienced a marked decline in visitors during the 1950s and 1960s due to changing leisure patterns, a lack of investment in new facilities and a widely held view that tourism was unnecessary for the town's future. That is crazy. Tourism is so very important for us all.
Madam Deputy Speaker, you and I visited a beautiful part of the world last year, but however beautiful the places that we visit, there is no place like home. The United Kingdom has so much to offer. People say to me, "But David, what about the weather? You cannot rely on the British weather." We can in Southend. Any meteorologist will confirm that we have the greatest number of hours of sunshine and the lowest rainfall—although that may not always be a good thing—and that the weather in Southend is always glorious. Anyone who suffers from asthma, hay fever and other such ailments will find that Southend can cure them all, due to the ebb and flow of the Thames estuary.
During the 1970s, the decline in tourism levelled, but left a legacy of environmental problems, especially in the Marine Parade area of Southend. There was also renewed awareness of the advantages of a thriving tourist trade and the likely cost to the town of stagnation and further decline. In 1985, the council reaffirmed its commitment to encouraging tourism and, in 1989; it published a corporate tourism and resort strategy. It acknowledged the potential benefits of leisure development, increased facilities, jobs and income for local residents and businesses and the need for the council to become actively engaged. I am delighted that the council, which is composed of members of all political persuasions, supports that strategy.
The aims of the strategy are: to promote the resort potential of the town by identifying development opportunities and encouraging the provision of new tourist facilities and visitor attractions; to work to achieve improvements in the environment of the main tourism area along the adjoining seafront; to retain an adequate stock of serviced accommodation and promote the provision of new facilities; and to encourage the provision of improved facilities for water recreation and the retention and development of entertainment, cultural and arts facilities.
I hear siren voices saying, "What on earth is the good of a wish list and strategy like that?" Unless we put down on paper what we wish to achieve, how can we measure

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whether we are achieving it? It is clear that no strategy can be set in stone because things are changing constantly, but in my view the local authority's decision to embark on some sort of strategy was an excellent idea.
The Minister for Tourism, Film and Broadcasting will be only too well aware that the Conservative party has published a document called "Tourism Today", the details of which I will not go into, much to the Minister's relief. The document talks about standard spending assessments and about help generally given for seaside resorts. The Minister will readily acknowledge that the decline of seaside resorts has been a problem generally. The hon. Lady's Department can do only the best that it can in the spending round against all the competing bids for health, education and other services, so I am not expecting her to be able to comment on that. However, I would support anything that she can do to encourage her colleagues to give more money to seaside resorts because we know well that they are extremely important for the United Kingdom's economy.
The two coastal areas in my constituency of Southend, West are Leigh and Chalkwell. In a debate a few months ago, I frankly expressed my dismay at the way in which the objective 2 negotiations had been handled. We were told before Christmas that Leigh and Chalkwell would qualify, but out of the blue we were later told that the fisheries strand was no longer being taken forward and that we were going for the urban strand and—hey presto!—Southend, West lost the £15 million that would have been available over five years. I complained that I had been elected to the House at the same time as the Prime Minister, but had never had a letter from him in all those years. The next day, a letter arrived from the Prime Minister, saying that he was aware of my disappointment about objective 2 status. He said that the then council knew all about the matter, although it said that it did not. Whatever happened, Leigh and Chalkwell lost out. I know that the Minister can do nothing about that now, but I hope that she will encourage those of her colleagues who work closely with the European Community to ensure that Leigh and Chalkwell are not left out.
The situation in Leigh and Chalkwell is different, but they need help. I have a wonderful briefing from Leigh town council, which makes it clear that, while Southend was set up as a tourist resort, Leigh was and still is a working marine village. It is just 40 minutes by train from London to that magnificent fishing village. It is "quaint" and has everything to offer, although because it is so quaint, it has no electric arcades, bingo halls or funfairs and is more peaceful than elsewhere. We have a tea room that sells clotted cream teas and we have quaint cobbled streets, a beautiful nature reserve called Two Tree Island and arts and crafts centres. We do not want Leigh to become an entertainment extension of Southend; we want it to retain its charm as a niche for tourists.
Leigh has access and parking problems and residents feel that their needs must be considered. There are also problems with boat access and accommodation. However, Leigh offers several opportunities. There are small craft shops in the old town and other specialist retailers in the town centre. We want to maintain Leigh's designation as a port to ensure that the marine industries stay in the town. Public transport access to
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Leigh and Chalkwell stations is good, there is plenty of space for walking, picnicking and nature observation, and food and drink are available from our wonderful restaurants. I was in Agostino's restaurant with a party of people on Saturday, and there is the Paris restaurant—indeed, we have every variety of restaurant one could imagine.
We want to keep the creek open to commercial boats and pleasure sailors and ensure that Leigh has a future as a working marine village. To do that, we need to dredge the creek, and we had hoped to get European money to do that. There is all sorts of talk about dredging that would keep the creek clear for only five years. If the creek is to be dredged properly, however, we need to spend more. That would mean a great deal to the local community.
Chalkwell is an attractive part of the town. Without question, Southend has the finest parks department in the country. Unfortunately, Chalkwell currently has a problem with graffiti. As I have mentioned many times in the House, we keep having meetings with the police, who keep finding the perpetrators, and we then move on to someone else. If the Government have a new strategy to deal with graffiti, I would be delighted to hear about it.
The newly appointed chairman of the leisure, culture and sports committee is our retiring mayor, Councillor Tony North. He is new to the job, so he is now putting his wish list together. I greatly hope that the Minister, who receives invitations from all over the country, will be able to visit Southend—she would receive a very warm welcome. She knows that we have had a challenging situation with asylum seekers, with one or two unfortunate incidents, but I am delighted that the Minister of State, Home Office, the hon. Member for Hornsey and Wood Green (Mrs. Roche), is in Southend at the moment meeting my parliamentary neighbour. We hope for some good news in our attempt to sort out that difficult situation.
There has been £50 million-worth of investment in Southend in the past 10 years. The annual day visitor market is estimated at more 3 million. There has been increased film and television coverage of the town, some of which I do not welcome. For 14 years the chattering classes used to take the mickey out of my previous constituency. One or two television companies seem keen to come to Southend to show a few elements that are best not broadcast to the wider public. We welcome all visitors to the town, but under no circumstances do we welcome yobs or drug pushers, as all Members of Parliament would make plain. It is a shame that some television companies and a few other people appear to want to advertise the worst elements of the town.
Southend's marketing division won the British Resorts Association Daily Mirror trophy for the best brochure cover in 1999. I am not surprised—it has a fantastic cover with photographs of a crowd of models. Anyone reading it would ask, "Why did I go to Tuscany for my holiday last year when Southend looks so fantastic?"
Peter Pan's playground is every bit as good as Disneyland and has had more than 1.5 million visitors. I pay tribute to Philip Miller, who is an amazing entrepreneur. He has just taken over the Sea Life environmental centre in Southend. I am keen on tropical

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and marine fish and am delighted to tell the House that the centre is now breeding many species of sea horses from all over the world. In two weeks' time I shall visit the Chelsea flower show. Southend always enters the flower show and was a world finalist in 1999. The Southend air show is the largest free event in the country. Last year I stood at the air show with the mayor and my wife. In the sky we saw the Utterly Butterly light aircraft. My wife and the mayor wanted to go up. So, Madam Deputy Speaker, when you and I were in Kenya, my wife and the then mayor were strapped to the front of the two light aircraft raising money for local charities. The town stages the biggest special events programme in the south-east and all sorts of other events take place there. The Cliffs pavilion offers a range of magnificent plays and shows. The Palace theatre is wonderful, and Southend has many other activities.
How can the Government help? First, they can help with transport. Southend badly needs an east-west road link to free some of the traffic. It badly needs help with the pier—as the Minister knows, our lottery bid was turned down—and we should like help with our ambitious hovercraft plans. Finally, anything that could be done to help with the dredging of the creek would be welcome.
I hope that I have convinced everyone that Southend is a place worth visiting and living in. I am very proud of the part of the town that I represent and I hope that the Minister will do everything she can to help the promotion of tourism and leisure in Southend.
12.19 pm
The Minister for Tourism, Film and Broadcasting (Janet Anderson): The hon. Member for Southend, West (Mr. Amess) is clearly as good an ambassador and spokesperson for Southend as he was for his constituency in a previous incarnation, which we remember well. There was hardly any aspect of Southend life that he did not mention. He managed, too, to get in a reference to the Chelsea flower show; his skills in the House are undiminished.
The hon. Gentleman clearly understands the potential of tourism and its importance to his constituency. The Government also understand it very well—when the Prime Minister gave me this job, the first thing that I did was reverse the order of my title so that Minister for Tourism came first. That was a small gesture, but it shows that the Government understand the importance of tourism to local economies throughout the country and to the national economy. Tourism's national contribution to the economy is about £63 billion a year. It employs 1.75 million people and is the fastest-growing industry in the world. We want to ensure that everyone has a fair share of it and I know that the hon. Gentleman will do what he can to ensure that people in Southend, especially in his constituency, will be included.
The hon. Gentleman referred to the Conservative policy document on tourism called "Tourism Today". I like to think that the Government's strategy document was more far sighted, because we called it "Tomorrow's Tourism". As the hon. Gentleman said, one of the challenges is to keep up with changing consumer
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demand; the days when families went to the seaside for a fortnight's annual holiday have long since gone. The hon. Gentleman mentioned that the number of day visitors to Southend is about 3 million. Places such as Southend have to meet the demands of day visitors and appeal to people taking short breaks.
"Tomorrow's Tourism" was the first comprehensive tourism strategy produced by a Government. As the hon. Gentleman said, without a strategy, how can success be measured? We have already made substantial progress in reaching the target set out in "Tomorrow's Tourism". Last July, we launched the new English Tourism Council to replace the English Tourist Board, because a leaner, more strategic body was required to guide the industry in England and to carry out research into changing customer demand and other matters. It will focus on top-quality research, market forecasting, the collection and use of key information, the spread of innovation and best practice, promoting quality and developing a strategy on sustainable tourism and wider access. If I have time later I shall refer to some of the excellent practices that have been established in Southend.
The ETC has already made an excellent start; with its partners the AA and the RAC, it launched a new national accommodation scheme last September. We are determined to increase the voluntary take-up of that scheme and I am pleased that the local authority in Southend has a marketing policy of advertising only the quality-assured properties in that scheme. Visitors to Southend and other resorts will return again and again only if they can be assured of a good experience and value for money. That is what we want to encourage. I congratulate Southend on having an above-average membership of the national accommodation grading scheme.
The hon. Gentleman raised anxieties about asylum seekers. I am pleased that the Minister of State, Home Department, my hon. Friend the Member for Hornsey and Wood Green (Mrs. Roche), is today visiting Southend to see the situation for herself. Many of the points raised by the hon. Gentleman are matters for other Government Departments. The problem has implications for the tourist industry and seaside resorts such as Southend. In such cases we take every opportunity to make our views plain to other Government Departments. I have already had many helpful meetings with my hon. Friend the Minister of State, Home Office and some other colleagues who represent seaside resorts. The Government are doing their best to ensure that asylum seekers are dispersed only to places where there is not only available accommodation, but appropriate social and community support and educational and employment opportunities.
The English Tourism Council has set up a number of taskforces that will report towards the end of the year on tourism trends, transport, sustainability and resort regeneration. I am sure that Southend will have an interest in its recommendations. Indeed, the experience of places such as Southend will have informed those deliberations. Seaside resorts still represent an important sector of our domestic holiday market, but despite their continued wide appeal, many are finding it hard to adapt to significant changes in holiday trends. Ultimately, it is up to the individual resorts to devise

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sensible regeneration plans. The hon. Gentleman mentioned that £50 million had been invested in Southend. Obviously all the players in Southend understand the importance of that.
I congratulate Southend on taking advantage of its good rail connections to continue to attract large numbers of day visitors. As the hon. Gentleman said, it is the closest seaside town to London, which is a huge attraction. I also commend it for not resting on its laurels. I have never visited Southend, but I should like to take up the hon. Gentleman's invitation. I look forward to the cream teas and the seafood. He tells me that the shopping at Leigh is wonderful. Rossi's and Tomassi's ice cream sound extremely good. I wish the new owner of the Sea Life centre good luck with his venture. Sea Life centres have been finding things relatively difficult recently and I hope that he can turn it around for the benefit of Southend.
I agree that it is a great pity not to ensure that the longest pier in the world is utilised to its full potential. I wish Southend the best of luck with any further applications to the heritage lottery fund. The hon. Gentleman said that there was nothing that I could do about that, but there is something that might be helpful. My officials have arranged with the British Resorts Association that its conference in Eastbourne in June will include a session with some of the lottery distributors, including the heritage lottery fund.
I hope that will help to emphasise to the lottery distributors the important needs of seaside towns, which have particular infrastructure problems such as piers and promenades that are not found elsewhere.
I hope that that I have reassured the hon. Gentleman that resort regeneration is one of the Government's priorities. We have made a lot of progress already. As he knows from a conversation that we had outside the Chamber, my Department made strong representations to try to ensure that the needs of seaside towns were recognised on the objective 2 map. I am sorry and I understand the hon. Gentleman's concern that the two wards in his constituency that were on the original map were not accepted by the European Commission. He will know that that is ultimately a matter for the Commission. If it is any consolation to him, four wards in my constituency were removed from the revised map, too.
Many resorts are included and I am pleased to say that Southend is in one of the new enterprise grant areas that offer opportunities to smaller businesses. That helps to illustrate the progress that has been made in the first year since the publication of "Tomorrow's Tourism". That was just a springboard. It was not a one-off exercise. We intend to keep in constant touch with the needs of the industry. I am grateful to the hon. Gentleman for telling us about Southend's needs. I will do all that I can to press the case for the projects he has mentioned—the hovercraft, dredging the creek, the east-west road link—with my colleagues in other Departments.
Finally, I congratulate the hon. Member on the way he speaks up for his constituency. His constituents should be proud to have him as their representative.

Privatised Utilities (The Wrekin)
12.30 pm
Mr. Peter Bradley: I am grateful for the opportunity to draw attention to the experiences of two communities in my constituency at the hands of privatised utilities. I am confident that in raising these matters I am speaking for thousands of communities, both rural and urban, up and down the country. Their needs have been neglected, their interests have been ignored or undermined and their environment and quality of life have too often been damaged and degraded. The two local examples are important for that reason. Through them I am raising issues of national importance.
I hope that the debate will lead to an acceleration of redress for the community of Hadley in the urban part of my constituency and of Preston upon the Weald Moors in the rural part. I also hope my hon. Friend the Minister will promise to close the loopholes in the permitted development system that enable utilities to ride roughshod over local communities. Perhaps he will go further and impose an obligation on utilities to provide the public services and fulfils the social responsibilities that they have jettisoned—as the high street banks have—in the single-minded pursuit of profit. That is long overdue and would be extremely popular. The privatised utilities would have no one but themselves to blame if tougher regulation were imposed on them.
I have raised the epic saga of the Hadley pylon before in the House. I am grateful to successive Ministers for the support they have given to the residents of Hadley Park road and Wheatley crescent and the indefatigable members of the Hadley pylon action group.
In November 1997, the Midland Electricity Board, acting for the private developer Cofton Land and Property, undertook to underground—which is a verb I have learned in the course of these events—cables beneath a proposed housing development. Cofton Land and Property's intention was to enhance the amenity of the residents of that new estate and to increase the number and value of properties that could be built on the site and thus the profitability of the scheme. The work necessitated the erection of a new pylon in roughly the same position as an existing one. The local residents may not have come to love the old pylon, but they had become used to it. The new pylon presented a different aspect. Looking out of the back windows of properties on Hadley Park road and Wheatley crescent was like being confronted by one of the monsters from H. G. Wells's "War of the Worlds". The morning after the new pylon was erected, someone waking up and opening the curtains would have thought that the Martians had landed.
The works were not undertaken for any environmental benefit, but purely for commercial reasons—to facilitate the development of 300 homes for sale—and at the expense of the existing community. The method of under grounding was a reserved matter in the original planning consent for the development. Despite an obligation to do so, the MEB made no application under section 37 of the Electricity Act 1989 to take down one pylon and erect another. It did not consult the local community or initiate any negotiations with the local planning authority, Telford and Wrekin council. The MEB has claimed that it was not obliged to make an application or to consult, because the new pylon occupied

195WH
the same space as the old one and, under the regulations, was therefore technically exempt from the process. That was simply one of many fabrications and untruths promulgated by MEB throughout this long and sorry story. It was disproved in May 1998, when the ever-resourceful and energetic members of the Hadley pylon action group secured—by what means I cannot say—a JCB digger and managed to excavate the foundations of the original pylon.
Faced with such incontrovertible evidence, MEB was finally obliged in July 1998 to concede that the pylon had moved. For Telford and Wrekin council—and, more to the point, the Department of Trade and Industry—that meant that MEB had been wrong not to apply for consent to move the pylon. In August 1998, 18 months after the works were undertaken, the DTI wrote to MEB expressing its "dim view" of the company's conduct and pressing for prompt retrospective action. As I mentioned, fabrication has regrettably played a greater part in the story than I should have liked. Delay has been another feature of the MEB's conduct. It has held the community, the local authority and, latterly, the Department of Trade and Industry, in utter contempt.
On 27 October, despite the plea from the DTI for prompt retrospective action, MEB refused to make the application that the DTI was urging it to make. In November, the DTI expressed "deep disappointment" at that decision. In February 1999, two years after the unlawful action, the DTI was obliged to threaten prosecution. It was pointed out to me that this would be only the second prosecution of its kind in 10 years. On 22 February last year, MEB promised that it would submit an application, but by July it had still not submitted to the council the background information and the detailed drawings and specifications that would make the application valid.
In October 1999, after showing extraordinary forbearance and patience, the council took the matter to an emergency committee meeting and rejected the application in favour of a public inquiry. Seven months later, MEB, now known as GPU Power Distribution, has threatened to move the pylon back to its original position. I use the word "threatened" because, far from seeking to appease residents, the company has made it clear that such a move would mean the compulsory purchase of part of their gardens. I mentioned the contempt in which MEB has held the local community and those who represent it in the past two years; that is the icing on the cake.
That cynicism is not atypical of the behaviour of MEB in my constituency and elsewhere—or of many other privatised utilities. The public inquiry that the DTI has now confirmed will take place will be of national significance. That is why MEB has resisted for so long. It knows that much will hang on the decision made at the inquiry. The current state of permitted development rights will be called into question. Those rights were referred to early in 1998 in a consultation document from the Department of the Environment, Transport and the Regions, called "The Use of Permitted Development Rights by Statutory Undertakers". That document stated:
PDRs are supposed to simplify procedure and hence remove administrative and procedural burdens from statutory undertakers in delivering their services.
196WH
The phrase "in delivering their services" is the critical one. I do not dispute the value of exemptions from the unwieldy and often lengthy planning process and related processes; nor do I dispute that statutory undertakers should have recourse to those exemptions, if they use them to provide essential services—such as gas, electricity, water or sewerage—to communities. However, those rights were not intended to facilitate commercial transactions between private companies pursuing profit at the public's expense, as has happened in this case. They were not intended to allow utilities to circumvent local authority controls in order to avoid their responsibilities and to make maximum profit at minimum cost. That is what happened in Hadley; MEB used its exemptions not to provide power, but to pursue a purely commercial transaction to facilitate a private development. I believe that that is an improper use of permitted development rights.
I hope that the Government will now act to ensure that new guidelines are issued to utilities and to local authorities. Those guidelines should make it clear that permitted development rights are to be used in future only in order to secure public services and public benefit, and that even then they should be exercised only under proper scrutiny and control by the local authorities. I hope that Ministers will also take the opportunity to review the compulsory purchase powers of the utilities. I believe that MEB has behaved disgracefully. The fact that the issue has come not just to local but to national notice is a credit to the Hadley pylon action group and its extraordinary efforts over the past two and more years. That applies especially to Ann West and Sandra Hodnett, who regularly attend my surgery and whom I confidently expect to see this Friday. They will not give up and neither will I. We are encouraged by the support that we have received from the Department of Trade and Industry and we hope to receive more, not just for the benefit of people in Hadley, but for the benefit of communities throughout the country that have suffered similar outrages. We confidently await the public inquiry, as we know that we have strong case.
The second issue that I want to raise concerns my constituents in Preston upon the Weald Moors—a small village just five miles or so from the major new town of Telford. Like thousands of settlements throughout rural Britain, the village does not have mains sewerage. Many such villages do not have access to electricity or gas—indeed, Preston does not have the benefit of a speed limit either. In this day and age, it is extraordinary that villages so close to major conurbations do not have the benefit of the essential services that so many of us take for granted.
In October 1998, following a visit that I had paid to Preston in the previous year, during which residents told me of their concerns about the lack of mains sewerage, and after protracted correspondence with Severn Trent Water, I received a letter from Mr. Robin Alexander. The letter was concise and to the point. It stated that
approval has been given to a sewerage scheme which will improve the drainage of both Kynnersley—
a neighbouring village—
and Preston on the Weald Moors.
It gave no qualification. It made it clear that the works would be undertaken. In subsequent correspondence, I was told that work would be under way early in 2000 and that it would be completed at the end of this summer.

197WH
A year later, in October 1999, I received a letter from no less a person than the managing director of Severn Trent Water, Mr. Brian Duckworth. He, too, put in writing the same assurance. The letter stated:
I can also confirm that the Preston and Kynnersley project remains in our programme.
A few months later, in March this year, I was informed that the Preston scheme had been dropped altogether and that the Kynnersley scheme, which remained in the programme, was now unscheduled.
Those decisions were not made on the basis of the needs of the people in Preston upon the Weald Moors. Of the 37 households that responded to a questionnaire, 30 said that they were in favour of connection to mains sewerage and that they would be prepared to pay their connection charges. It is not that there is no physical need for a sewerage system in Preston; some of the septic tanks that are used by many of the householders are now leaking and could constitute a health hazard. A primary school in the village has similar problems. If the managing director of Severn Trent is to be believed, the reason for the scheme being dropped from the programme, despite the pledges that were made, is that Severn Trent Water is a company that is going down the plughole. Last year, Ofwat required a 14.1 per cent. reduction in the charges that it imposes on consumers. In a letter to me, Brian Duckworth said that Ofwat's long overdue initiative had imposed
very severe reductions in our income and consequently in our ability to fund capital projects.
That comment is from a company that, since privatisation, has imposed on householders a 90 per cent. increase in charges, has paid its shareholders more than £2 billion in dividends and has handed massive bonuses to its directors. In the past few months, it has announced 1,100 redundancies to add to the 2,500 redundancies suffered since privatisation by the men and women who worked for Severn Trent Water and secured its profits. The company never has to suffer, nor must it ever foot the bill—that is always for the consumer and the employee.
The situation provides the clearest evidence that, when privatisation is accompanied by inadequate regulation, there is cash on tap for the directors and shareholders of the privatised utilities—here, Severn Trent Water—and the service goes down the drain for the consumer. The previous Government were responsible for the disaster; I hope that the present one will take steps to make amends. As I said, it is disgraceful that rural communities should be expected to live without mains services in the 21st century. That is why, when the rural group of Labour MPs, which I chair, published its "Manifesto for Rural Britain" last month, it called for an obligation to be placed on the utilities to develop scheduled programmes of connection, with costs approved by the regulator, which would be affordable to consumers. That would enable isolated communities in the countryside to join the 21st century.
The people in the Preston upon the Weald Moors and Kynnersley case ought not to have to await action from the Government or from the regulator. Severn Trent Water made a cast-iron pledge to them in writing to their local Member of Parliament. I expect the company to honour its obligation and to recognise that it has a social responsibility to fulfil.
198WH
Severn Trent Water might think that it is up against a small community that does not have the resources or the resolve to challenge it. That view would be wrong—the residents of Preston upon the Weald Moors and Kynnersley are no less likely than the residents of Hadley to take this matter lying down. The villages may be small, but the residents will make a big fuss. I will do what I can to help them. I am grateful to the regional division of Ofwat and to its chairman, Clive Wilkinson, who has written to the company, making clear the regulator's position. He said:
As a company of integrity that expressly sets out its desire to be customer orientated and provides high quality service we therefore expect schemes to be completed as promised during the current financial year.
Unfortunately, Ofwat's powers are limited in the matter. That is why I and the people of Preston upon the Weald Moors and of so many other communities in similar positions look to the Government to ensure that the utilities recognise, or are made to recognise, their responsibilities and that they live up to them. I have no problem with private profit or with utilities making their margin. However, I want that private profit to work in the public interest.
As I have said before, these issues will resonate in communities throughout the country. I hope that the Minister will recognise not only the importance of the problems to which I have referred, but the urgency of providing solutions to them.
12.48 pm
The Minister for Competition and Consumer Affairs (Dr. Kim Howells): I congratulate my hon. Friend the Member for The Wrekin (Mr. Bradley) on securing the debate. My Department is aware of the keen interest that he has shown in representing his constituency on the matters raised and in attempting to resolve the matter of the Hadley pylon. Before I proceed, I should tell my hon. Friend that responsibility for the behaviour of Severn Trent Water with regard to sewerage lies with the Department of the Environment, Transport and the Regions. If he wishes me to pass on to the relevant Ministers the evidence that he has quoted today, I will gladly do so. However, I cannot speak for that Department on the subject of connection to mains sewerage, important though the matter is.
I shall deal with the Hadley pylon. As my hon. Friend informed us, the story started about 26 months ago. In March 1998, the Department was alerted to a change sought by Midlands Electricity to a steel pylon off Hadley Park road in Telford—a change that caused great concern to local residents. It emerged that the work that the company wished to undertake breached the statutory planning regime. Although the regime makes provision for minor works to be carried out without planning permission or further Electricity Act consent being needed, that applies only within certain specifications as set out in regulations. In the present case, the Department concluded that the company had breached the requirements, and it wrote to Midlands Electricity in August 1998 to express its view and to ask the company to take prompt action to remedy the situation.
It is only right that companies should have the opportunity to reflect on the legal aspects of the Department's view and to make further representations.

199WH
Breaches of statutory regimes are a serious matter and can lead to criminal prosecution. For that reason, although the Department will rigorously pursue alleged breaches in order to protect the credibility and integrity of the regime, it is far better for matters to be resolved constructively than for them to degenerate, with companies taking an entrenched and antagonistic position. As my hon. Friend told us, such breaches are rare. The Department has seldom had to take the extreme measure of prosecuting an electricity company. Indeed, as my hon. Friend said, only once during the past 10 years has the Department had to take an electricity company to court over a breach of the statutory consent regime. As my Department deals with up to 1,000 cases a year, that is a rare occurrence.
The Hadley pylon is exceptional, although I take to heart the general lessons that my hon. Friend draws from it. I realise that it may be no comfort to the local residents, who are frustrated at the apparent lack of action, but the Department has quietly and persistently moved matters forward. In March 1999, the company submitted a section 37 application, which was the Department's preferred course of action. The Department actively ensured that adequate information was made available by the applicant company, so that, after consulting the company and interested local parties, the local planning authority could come to a view.
It is a requirement of the section 37 process that a local planning authority, which represents the local perspective and has a detailed knowledge of the locality, should be able to give the Secretary of State a considered view. That the local planning authority has now done, following further discussions with Midlands Electricity—or GPU Power Distribution, as it is now known. The authority confirmed its earlier objection. The local authority wrote as recently as April asking for a public inquiry to be held. The ball is now in the Department's court. Unless material developments occur to resolve the matter, a public inquiry will be held. That statutory regime is specific: if the local planning authority objects and if, after discussion with the applicant, it does not withdraw its objection, the Secretary of State must hold a public inquiry. I believe that the objection has not been withdrawn.
I can understand that my hon. Friend and his constituents might feel frustrated by the protracted procedure, but it is obviously preferable to try to reach an agreed solution, rather than to have one imposed without time to reflect on the consequences. Public inquiries can be lengthy and costly, and without any guaranteed outcome. In our experience, this is an exceptional situation, which must be considered in the context of the Department's responsibilities for up to 1,000 overhead line applications a year, the majority of which are determined without a public inquiry.
In the few remaining minutes, I want to deal with my hon. Friend's comments about the overhead line regime in general. I am aware that experience may lead to calls for the regulations—whereby electricity companies can carry out works without requiring specific planning permission—to be revoked. Those regulations were put in place for reasons that remain perfectly sound. Like any installation, an overhead line will, in order to
200WH
continue reliably and safely in service, need repair, refurbishment, modification or reconstruction. The extent of that work will inevitably vary.
Although the regulations provide for operational changes such as the installation of a temporary line while the permanent line is refurbished and the replacement of any existing line subject to specified limitations, there is inherent power in any existing consent to effect necessary repairs and improvements, provided that the appearance of the line is not materially altered. The relaxations specified in the regulations do not apply in specially designated areas and, for some changes, the company would need to obtain clearance from the local planning authority, which could require full planning permission to be sought.
When the regulations were introduced in 1990, wide consultation took place with electricity companies and local planning authorities, the outcome of which was reflected in the regulations. The regulations have been in force for some 10 years now without any evidence of fundamental problems. As I have said before, this case is exceptional, and despite my hon. Friend's most eloquent plea, the Department doubts whether it is appropriate to launch a major rethink without evidence that the regulations are not operating effectively. That is not to diminish the impact of the situation that my hon. Friend described, which is serious, but we do not believe that it necessitates a major rethink.
I am well aware that the view is often expressed that overhead lines should be put underground. However, there is no getting away from the fact that underground lines are significantly more expensive—at high voltage, in the order of 10 to 20 times more expensive. Ignoring for the moment the fact that underground cables are not without operational problems—they can take longer to repair, are less reliable and might not be suitable for all locations—the issue remains of who will pay for them. The wires businesses of companies are regulated businesses, which operate under price controls. My hon. Friend mentioned the fact that Severn Trent Water is in great difficulty as a result of price caps imposed by the water regulator, Ian Byatt. Price caps have also been imposed on the regulated parts of electricity companies' businesses, and, in many cases, they are stringent.
Companies cannot underground at will, and they would inevitably try to pass on the cost to consumers, both domestic and commercial. Those costs could be substantial. For example, it was estimated in the early 1990s that it would cost £100 billion to underground the whole system, which demonstrates the sheer magnitude of the situation. Developments in technology are unlikely to provide any immediate help in offsetting the cost differential. All that suggests that a sensible case-by-case approach must be adopted.
We have discussed a very difficult case, of which I assure my hon. Friend the Department is well aware. Unless the local authority produces new evidence, a proper public inquiry will be held. I know that my hon. Friend has pressed for that. He has represented his constituency well in that respect and his constituents must be proud of him.
It being One o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.

FOREIGN AND COMMONWEALTH AFFAIRS

  Kosovo
  Mr. Edwards
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the role of the United Nations in Kosovo. [121067]

  Mr. Vaz
  [holding answer 5 May 2000]: The United Nations Mission in Kosovo (UNMIK) has the unenviable task of reconstructing a devastated province and reconciling a polarised population. To this end UNMIK's operations have divided up under four pillars, covering civil administration, humanitarian relief, democratic institution-building and reconstruction.

  We fully support UNMIK's efforts to carry out its mandate and have provided UK personnel to assist in local government, 60 civilian police officers with a further 90 promised and £119 million in humanitarian relief and reconstruction aid.

  Sierra Leone
  Mr. Mackinlay
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the situation in Sierra Leone. [121299]

  Mr. Hain
  I refer my hon. Friend to the answer given by my right hon. Friend the Foreign Secretary on 8 May 2000,Official Report, columns 518-29.

DEFENCE

  Nuclear Test Veterans
  Mr. Welsh
  To ask the Secretary of State for Defence how many claims for compensation by British nuclear test veterans have been(a) made and (b) settled to date. [121304]

  Dr. Moonie
  My Department has recorded 144 claims for compensation from British nuclear test veterans. As there is no evidence of excess illness or mortality among British nuclear test veterans as a group which could be linked to their participation in the nuclear tests, no compensation claims from them have been settled. In any event, prior to May 1987, Service personnel were prevented from pursuing claims for compensation from the Ministry of Defence by section 10 of The Crown Proceedings Act 1947. The repeal of section 10 by the Crown Proceedings (Armed Forces) Act 1987 was not made retrospective and claims arising from injury or illness caused before the repeal are barred by law.

HOME DEPARTMENT

  Dr. Harold Shipman
  Mr. Pendry
  To ask the Secretary of State for the Home Department what representations he has received from hon. Members regarding an inquest on the 23 alleged victims of Dr Shipman; and if he is minded to direct the Stockport coroner to hold such an inquest. [121461]

  Mr. Straw
  No representations have been made to me on this matter other than from my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry). Having regard to all the issues, including the difficult position for the relatives if the deaths were not investigated in public, I have agreed that inquests should take place and directions have been sent to the coroner accordingly. The directions give the coroner authority to hold inquests. However, the detailed handling arrangements are matters for the coroner to determine.

  Radio (Emergency Services)
  Mrs. Browning
  To ask the Secretary of State for the Home Department what representations he has received from(a) other Government Departments, (b) the Fire Service, (c) the Ambulance Service and (d) the Police concerning the Radio Replacement Scheme. [121336]

  Mr. Charles Clarke
  I have received various representations from police forces, the Association of Police Authorities, individual Police Authorities and other interested organisations in England and Wales about the Public Safety Radio Communications Project (PSRCP). The project represents an important part of our commitment to ensure that the police have access to the modern facilities they need to play their key part in tackling crime and disorder and improving community safety. Concern has been expressed about the cost of the project. I recognise those concerns. Over the three year period starting from the 1999–2000 financial year, the police service will receive an additional £1.24 billion in central Government funding. The annual charges for the PSRC Service will be reduced by the £50 million that I obtained from the Capital Modernisation Fund, specifically for the PSRCP. Consideration of the financial pressures on forces will also be taken into account in the overall level of resources to be provided to the police service in future years as part of the year 2000 Spending Review.

  I have received, also, various representations from the fire services about future radio communications and control room requirements, including views on cost and on participation in the PSRC Service. All fire authorities in England and Wales are now required to undertake Best Value reviews of their communications requirements in 2000–01. I am making available to fire authorities this week the results of a consultancy study to assist consideration of their future control room needs. This strongly confirms the benefits of a joined-up approach in exploring technology to create new possibilities for improving cost-effectiveness and service delivery. This will be followed by guidance on take up of the PSRC Service.

  The PSRC Service represents a positive approach to options to radio replacement programs within the Ambulance Services. The NHS Executive is reviewing this.

  Chinese Head of State (Visit)
  Mr. Mackinlay
  To ask the Secretary of State for the Home Department if he will make a statement on the conduct of the Metropolitan police in relation to protesters during the Chinese Head of State's visit in 1999. [121298]

  Mr. Charles Clarke
  The policing arrangements for the State Visit of the President of China were fully reviewed by the Metropolitan police after the visit, and a copy of the review placed in the Library.

  Since that time, the Commissioner of Police of the Metropolis has accepted, in the context of court proceedings, that the removal of some flags and banners from protesters was unlawful.

  EU Action Plan
  Mr. Bercow
  To ask the Secretary of State for the Home Department if he will make a statement on the role of Europol in co-operation with the Russian Federation authorities combating organised crime in the context of the EU Action Plan. [120851]

  Mr. Charles Clarke
  In its meeting on 27 March 2000, the Justice and Home Affairs Council approved the European Union Action Plan on common action for the Russian Federation on combating organised crime. In that meeting, the Council also adopted a Decision authorising the Director General of Europol to enter into negotiations on agreements with certain third states, including the Russian Federation, and non-European Union related bodies. The Government welcome this Council Decision which, in the context of the Action Plan, enables Europol to play a full part in supporting co-operation between the member states and the Russian Federation in combating the common threat from organised crime to mutual advantage.

  Schengen Agreement
  Mr. Bercow
  To ask the Secretary of State for the Home Department if he will make a statement on Government policy on acceding to elements of Schengen in lieu of a third state agreement, as set out in the Council Decision of 27 March, 2000/C106/01; what elements of

  Direct Costs

  £ million

  Benefit

  1995–96

  1996–97

  1997–98

  1998–99

  1999–2000

  Home Office

  —

  —

  —

  —

  537

  Department of Social Security:

  Income Support and Jobseeker's Allowance

  205

  195

  150

  150

  1—

  Housing Benefit

  205

  195

  145

  125

  —

  Council Tax Benefit

  10

  10

  10

  10

  —

  Department of Health:

  Adults/Families

  —

  10

  68

  170

  —

  Children

  —

  3

  2

  20

  52

  Total (to nearest £ million)

  420

  413

  375

  475

  590

  1 Home Office figures for 1999–2000 include the following amounts paid to the Department of Social Security for the cost of asylum support:

  Income Support and Jobseeker's Allowance—£170 million

  Housing Benefit—£135 million

  Council Tax Benefit—£10 million

  Note:

  Figures may not sum due to rounding
  332W
  information may not be shared under the latter agreement; and what assessment he has made of the additional benefits from direct partial accession. [120850]

  Mrs. Roche
  The United Kingdom Government have applied to participate in the law enforcement and judicial co-operation aspects of the Schengen acquis, including the Schengen Information System (SIS), in order to enhance co-operation at European Union level in the fight against organised and international crime.

  The purpose of the Council Decision referred to is a limited one: it authorises the Director of Europol to enter into negotiations on agreements with third States and non-European Union related bodies. The United Kingdom is, of course, already a full member of Europol.

  The Decision does not cover the broader police and judicial co-operation arrangements provided for in the Schengen Convention, nor the opportunity to participate in the SIS.

  Europol and the SIS were established for entirely different purposes: the Europol Convention specifically excludes exchanges of information between the two databases. The Government's application to participate in parts of the Schengen acquis is complementary to its existing participation in Europol.

  Magistrates Courts
  Mr. Hurst
  To ask the Secretary of State for the Home Department if he will estimate the cost to the probation services in England and Wales consequent upon the closure of magistrates courts from 1 January 1995 to 31 December 1999. [121030]

  Mr. Boateng
  The information on which such estimates could be based is not held locally.

  Asylum Seekers
  Mr. Evans
  To ask the Secretary of State for the Home Department how much his Department spent (i) directly and (ii) indirectly on asylum seekers in(a) 1995, (b) 1996, (c) 1997, (d) 1998 and (e) 1999; and what estimate has been made of expenditure in the year 2000. [119485]

  Mr. Straw
  [holding answer 17 April 2000]: The following amounts have been directly spent on supporting asylum seekers. Expenditure is recorded by financial year and it is not possible to give figures for calendar years.
  333W
  The Department of Health did not incur costs of supporting asylum seekers before 1996–97, but from 1996–97 to 1998–99 was responsible for Special Grant payments to local authorities towards the cost of supporting asylum seekers. In 1999–2000, responsibility for grant payments for adult singles and families transferred to the Home Office, with responsibility for unaccompanied asylum-seeking children remaining with the Department of Health.

  The Home Office also incurs other costs of dealing with asylum seekers, but these cannot be separated from the overall costs of the Immigration and Nationality Directorate. The following table shows the annual outturn for Immigration and Nationality Directorate, which includes the cost of dealing with asylum seekers. The budgeted amount for 2000–01 has yet to be confirmed.

  Indirect Costs

  £ million

  Year

  Amount spent

  1995–96

  199

  1996–97

  212

  1997–98

  215

  1998–99

  209

  1999–2000

  1260

  1 Forecast outturn

  The Lord Chancellor's Department also incurs costs in dealing with asylum seekers, but these cannot be separated from the overall running costs of the Immigration Appellate Authority. The following table provides administration costs of the Immigration Appellate Authority, which includes the costs of dealing with asylum seekers but excludes accommodation recruitment and other capital expenses. The budget for 2000–01 has yet to be confirmed.

  £ million

  Year

  Amount spent

  1995–96

  8.4

  1996–97

  11.4

  1997–98

  12.5

  1998–99

  14.1

  1999–2000

  16.1

  The Department of Social Security estimates that between 1994 and 1999 the annual administrative cost for income support asylum seeker claims was in the region of £1 million. In 1999–2000, the estimated cost is in the region of £2 million.

  The Department of Health is unable to quantify the indirect cost of asylum seekers as no data are collected for analysis.

  The Department for Education and Employment does not collect information centrally about education, training or employment provision for asylum seekers or their dependants and cannot supply costs spent directly or indirectly from 1995.

  The Department for the Environment, Transport and the Regions has no programme of expenditure on asylum seekers and indirect expenditure is not separately identifiable.
  334W
  The number of asylum seekers in Northern Ireland is extremely small and any expenditure is, therefore, negligible.

TREASURY

  Employment Tax Credits
  Mr. Matthew Taylor
  To ask the Chancellor of the Exchequer, pursuant to his answer of 19 April 2000,Official Report, column 588W, on employment tax credits, what is the higher rate for couples. [120799]

  Dawn Primarolo
  [holding answer 4 May 2000]: The rate for couples in the illustrative model of the employment tax credit for people without children is £49.50 a week. This is the same as the employment tax credit for people with children that is implied by the introduction of the integrated child credit, based on April 2001 rates of Working Families Tax Credit and Children's Tax Credit. Details of this illustrative model are set out in the table on page 14 of the Treasury paper "Tackling Poverty and Making Work Pay—Tax Credits for the 21st Century".

  Tax (EU)
  Mr. Redwood
  To ask the Chancellor of the Exchequer what proposals are under negotiation in the EU for(a) Europe-wide taxes and (b) European limits and controls on national taxes. [120809]

  Dawn Primarolo
  [holding answer 5 May 2000]: EC proposals for legislation are considered by the European Scrutiny Committee and Explanatory Memoranda concerning existing proposals on taxation are in the Library.

  EU-UK Trade
  Mr. Redwood
  To ask the Chancellor of the Exchequer what proportion of United Kingdom exports and imports counted as being within the EU, consists of entrepot trade through Rotterdam and Amsterdam(a) to and (b) from non-EU countries. [120810]

  Dawn Primarolo
  [holding answer 5 May 2000]: HM Customs and Excise are the Department responsible for collecting trade statistics on the movement of goods with other countries including EC member states.

  Goods from non-EC destinations that transit other EC member states before clearing customs procedures for import in UK are recorded as non-EC movements for trade statistics purposes. Likewise, goods from non-EC destinations that transit other EC member states after clearing customs procedures for export in UK are recorded as non-EC movements.

  Some trade reported as moving within the EC may have previously originated from, or be ultimately destined for, non-EC countries. However, under the Intrastat system these movements are not readily identifiable.

  UK Companies Overseas (Bribes)
  Dr. Cable
  To ask the Chancellor of the Exchequer what steps the Inland Revenue takes to ensure that bribes paid by UK companies overseas are not treated as tax-deductible expenses. [121032]
  335W
  Dawn Primarolo
  Section 577A, Income and Corporation Taxes Act (ICTA) 1988 denies tax relief for any payment the making of which constitutes the commission of a criminal offence.

  This effectively denies relief, inter alia, for any bribe which is contrary to the Prevention of Corruption Acts. There is also a general provision (section 577 ICTA) which denies tax relief for any form of business entertainment, hospitality or gift—so some payments which might be in a grey area might in any event be denied relief without the need to show that they were in any way corrupt payments.

  As far as enforcement is concerned, the Inland Revenue examines a proportion of tax returns every year, to ensure that taxpayers pay the correct amount of tax. Most of the returns that are examined in detail are selected after a risk assessment, which identifies those cases where errors are most likely, and where the amount at stake is greatest. Tax inspectors are trained to discover evasion, avoidance and technical errors, by establishing the full facts and applying the correct interpretation of tax law. As part of this process they will, where appropriate, make inquiries about claims for expenditure, to ensure that they are allowed under tax law.

  Children's Fund (Wales)
  Ms Julie Morgan
  To ask the Chancellor of the Exchequer what plans he has to distribute money from the Children's Fund in Wales; and what mechanisms will be used to distribute the fund. [119579]

  Dawn Primarolo
  The Children's Fund will be used to support voluntary sector projects providing local solutions to the problem of child poverty. These are devolved matters. Work on mechanisms for distributing money is currently focusing on England, but involves dialogue with the devolved administrations.

  The question of resources for the Children's Fund, including any consequentials for the devolved administrations, is being considered as part of the current Spending Review. In the event of spending consequentials it would be for the Welsh Assembly to decide whether and how to establish a Children's Fund for Wales.

HEALTH

  Smokers Helpline
  Siobhain McDonagh
  To ask the Secretary of State for Health how many calls were made to the new helpline for smokers between 10 December 1999 and 11 February 2000. [113837]

  Yvette Cooper
  70,480 calls were answered by the frontscreen service in the specified period. This includes hang-ups, hoaxes and trials, but does not include short-calls lost in the British Telecom system.

  Siobhain McDonagh
  To ask the Secretary of State for Health what has been the total expenditure on advertising the new helpline for smokers in the current year. [113838]
  336W
  Yvette Cooper
  The total sum of advertising spend on the new tobacco education campaign for the period 10 December 1999–31 March 2000 inclusive was £5,485,000. The breakdown is as follows:

  £

  Ambient media

  141,000

  Billboards

  1,242,000

  TV

  3,190,000

  Press

  397,000

  Radio

  515,000

  The aim of the new campaign is to increase the intention to give up, provide support and encouragement for those who want to give up by communicating that many smokers want to give up and that they are not alone; that giving up is an ongoing and difficult process and that individual support is available in local areas and through the helpline.

  Siobhain McDonagh
  To ask the Secretary of State for Health what proportion of calls to the new helpline for smokers were answered by an automated system (IVR) during the period 10 December 1999 and 11 February 2000. [113839]

  Yvette Cooper
  During the specified period 40 per cent. of calls were answered by the IVR system and 60 per cent. were answered by live operators.

  During the exceptional Millennium period (27 December 1999 to 3 January 2000) 58 per cent. of calls went to IVR and the rest to live operators.

  If these exceptionally high figures for the Millennium period are taken out of the totals the proportion of IVR to live would be 26 per cent. IVR to 74 per cent. live for 10 December 1999 to 11 February 2000.

  Mr. Barron
  To ask the Secretary of State for Health what the total expenditure was on advertising the new helpline for smokers, between 10 December 1999 and the end of March 2000; and what the expenditure on the Quitline was for the equivalent period in the previous year. [115395]

  Yvette Cooper
  The total sum of advertising spend on the new tobacco education campaign for the period 10 December 1999 and up until the end of March 2000 is £5,485,000. The breakdown is as follows:

  £

  Ambient media1

  141,000

  Billboards

  1,242,000

  TV

  3,190,000

  Press

  397,000

  Radio

  515,000

  1 The term Ambient media is defined as non-traditional, outdoor media.

  The total advertising spend for 1998–99 was £2,720,000, most of the campaign activity being concentrated in the December 1998 to February 1999 period.

  The aim of the new campaign is to increase the intention to give up, provide support and encouragement for those who want to give up by communicating that many smokers want to give up and that they are not alone;

  337W
  that giving up is an on-going and difficult process and that individual support is available in local areas and through the helpline.

  Mr. Barron
  To ask the Secretary of State for Health what proportion of calls to the new helpline for smokers were answered by an automated system (IVR) during the period 10 December 1999 to 11 March 2000 inclusive; and what was the proportion for calls to Quitline for the equivalent period in the previous year. [115394]

  Yvette Cooper
  35 per cent. of calls were answered by the IVR system in the specified period. The proportion of calls reaching the automated Quitline service in the equivalent period in 1998–99 was 26 per cent.

  If the exceptionally high figures for the Millennium period (27 December 1999 to 3 January 2000) are taken out of the totals the proportion of calls answered by IVR was 22 per cent.

  Mr. Barron
  To ask the Secretary of State for Health how many calls were made to the new helpline for smokers, between 10 December 1999 and 11 March 2000 inclusive; and how many calls were made to the Quitline, in the same period for the previous year. [115396]

  Yvette Cooper
  The 1999–2000 campaign was designed to motivate smokers towards a range of cessation options such as 'going it alone', seeking advice from a general practitioner or pharmacist or visiting a local cessation service, as well as telephoning the helpline or visiting the new campaign website.

  Calls to the helplines funded by the Department were as follows:

  10 December 1999 to 11 March 2000

  0800 169 0 169: 83,451 (calls answered)

  0800 00 22 00: 75,431 (calls answered)

  Total: 158,882.

  In addition, there were 231,891 hits to the website in that period.

  10 December 1998 to 11 March 1999

  175,827 calls were made to Quitline: 0800 00 22 00.

  Griffiths Inquiry
  Dr. Brand
  To ask the Secretary of State for Health when the report of the independent inquiry into clinical trials in North Staffordshire, prepared last year by a panel chaired by Professor R. K. Griffiths, will be published. [120306]

  Mr. Denham
  The review of the research framework in North Staffordshire was published on 8 May 2000.

  Rheumatoid Arthritis
  Mr. Woolas
  To ask the Secretary of State for Health what plans he has to make Etanercept available on the NHS for treatment of rheumatoid arthritis. [120655]

  Ms Stuart
  Etanercept will be available on the National Health Service as soon as the manufacturer launches the product in the United Kingdom.

  Mr. Boswell
  To ask the Secretary of State for Health when he will have completed the licensing process for the use of Remicade in rheumatoid arthritis; and if he will be referring this to the National Institute for Clinical Excellence. [120831]
  338W
  Mr. Denham
  [holding answer 8 May 2000]: Remicade has been authorised for the treatment of Crohn's disease. The authorisation was obtained through the European Centralised Procedure which is co-ordinated by the European Medicines Evaluation Agency. If the marketing authorisation holder applies for a new clinical indication for the treatment of rheumatoid arthritis, the Committee for Proprietary Medicinal Products at the European Medicines Evaluation Agency will review the available data and transmit its scientific opinion to the European Commission. European marketing authorisations are published in the form of a commission Decision in the official Journal of the European Communities. Presently, remicade does not form part of the National Institute for Clinical Excellence's (NICE) work programme for this year. However, NICE's work programme is continually being re-assessed and a number of possible additional topics for appraisal by NICE during the year 2000–01 are currently being considered. An announcement will be made shortly.

  Committee for Proprietary Medicinal Products
  Mr. Gale
  To ask the Secretary of State for Health what reports he has received of the commercial interests of the members of the Committee for Proprietary Medicinal Products. [121107]

  Ms Stuart
  [holding answer 8 May 2000]: The Committee for Proprietary Medicinal Products is a European committee for which I have no responsibility. I cannot, therefore, answer this question.

  Committee on Safety of Medicines
  Mr. Gale
  To ask the Secretary of State for Health if he will make inquiries concerning the commercial interests of all members of the Committee on Safety of Medicines; and if he will publish the results of those inquiries. [121106]

  Ms Stuart
  [holding answer 8 May 2000]: The commercial interests of all members of the Medicines Act Advisory Bodies, of which the Committee on Safety of Medicines (CSM) is one, are published annually in the "Medicines Act 1968 Advisory Bodies—Annual Reports", copies of which are available in the Library. The 1999 report is due to be published in July this year. The latest record of CSM interests in the pharmaceutical industry—correct at 5 May 2000—has been placed in the Library.

  Ozone-friendly Refrigerants
  Mr. Derek Twigg
  To ask the Secretary of State for Health what his policy is on the use of ozone-friendly refrigerants in air conditioning in NHS premises; in and what guidance is given on this in respect of purchasing new equipment. [120417]

  Ms Stuart
  [holding answer 8 May 2000]: It is the Department's policy to achieve best environmental practice and it is committed to the efficient use of energy and resources. This includes taking action to reduce/minimise pollution, or the risk of pollution, including ozone-depleting substances and greenhouse gases.
  339W
  National Health Service Estates—an executive agency of the Department—issued guidance "Model Engineering Specifications" that includes design notes C4, "Mechanical Ventilation and Air Conditioning Systems" and C10, "Refrigeration". This guides NHS bodies and encourages designers to use ozone-friendly refrigerants. NHS bodies are advised to take these matters into account when making their purchasing decisions.

TRADE AND INDUSTRY

  Coal Industry (BBC)
  Mr. Beith
  To ask the Secretary of State for Trade and Industry what information about his decision to pay subsidies to the coal industry was given to the BBC by(a) Ministers, (b) special advisers and (c) officials in his Department before Monday 17 April. [121050]

  Mr. Byers
  The Department maintains regular contact with the BBC on a range of issues.

  Staff Redeployment
  Dr. Cable
  To ask the Secretary of State for Trade and Industry if he will make a statement on the reasons for the recent redeployment from his Department's energy policy division of(a) Mr. Mike Atkinson, (b) Mr. Michael Orig, (c) Mr. Alan Wright and (d) Mr. Jonathan Green. [121047]

  Mrs. Liddell
  As is normal practice these moves were decided under the authority of the Permanent Secretary, as part of the Department's career management processes.

  Minimum Wage
  Mr. Cox
  To ask the Secretary of State for Trade and Industry how many prosecutions there have been to date for the non-payment by a company to their workforce of the national minimum wage. [121123]

  Mr. Alan Johnson
  [holding answer 5 May 2000]: There have been no criminal prosecutions under section 31 of the National Minimum Wage Act 1999 since it came into force 13 months ago.

  This is because the Act also contains a number of provisions empowering enforcement officers to take civil action against non-paying employers and the enforcement body will always use these in the first instance. However, there will be criminal prosecutions where the enforcement body considers them necessary.

  Spirometry Testing
  Mr. Cummings
  To ask the Secretary of State for Trade and Industry how many test centres have been established for claimants for compensation for chronic bronchitis and emphysema; where they are; and when he expects all planned test centres to be in operation. [120400]

  Mrs. Liddell
  Spirometry testing has been conducted at 36 centres at Barnsley, Blackpool, Bolsover, Bristol, Cannock, Cardiff, Chesterfield, Coventry, Deal, Durham, Drongon, Edinburgh, Glasgow, Hessle, Huddersfield, Leeds, Leicester, Lochore, Mansfield, Mexborough, Mountain Ash, Newcastle, Newport, Nottingham, Oxford, Pontefract, Plymouth, Salford, Sheffield, South Rislip, Stoke, Swansea, Whitehaven, Wigan, Wirral and 340W
  Wrexham. In addition to the 46,000 or so spirometry assessments carried at these centres, the Department has also assessed over 3,000 claimants in their homes.

  The centres in Barnsley, Bristol, Cannock, Chesterfield, Coventry, Durham, Edinburgh, Glasgow, Huddersfield, Leeds, Lochore, Mansfield, Mexborough, Mountain Ash, Newcastle, Newport, Nottingham, Pontefract, Sheffield, Stoke, Swansea, Wigan and Wrexham have now been fully adapted for the more detailed medical requirements of the main Medical Assessment Process (MAP). There are also new cantres in Ayr, Enfield and Manchester. In addition the spirometry centre in Deal will be adapted shortly. The need for further centres will be kept under review.

  Coal
  Mr. Mitchell
  To ask the Secretary of State for Trade and Industry if he will list in respect of(a) deep-mined and (b) open-cast coal the tonnages of coal produced in the latest year for which figures are available for each member state of the European Union, together with the amounts of subsidy provided; and if he will list the relevant articles of European Union treaties and relevant regulations or directives relating to limits on non-commercial support for the mining or marketing of coal. [120645]

  Mrs. Liddell
  I have no information on the division between deep-mined coal and opencast coal produced in other member states. Total hard coal production in the EU in 1999 was as follows:Germany 44 million tonnes, UK 36 million tonnes (21 million deep-mined and 15 million opencast), Spain 17 million tonnes and France 4.5 million tonnes.

  The last year for which figures are available for the amount of subsidy provided is 1997. In that year Germany produced 51 million tonnes with authorised operating aid of ECU 4,919.1 million. The UK produced 47 million tonnes (30.3 million deep-mined and 16.7 million open cast) with no operating aid. Spain produced 17.5 million tonnes with authorised operating aid of ECU 704.5 million. France produced 5 million tonnes of hard coal in 1997, but we have no information on the amount of operating aid paid.

  Issues relating to the production of coal are covered by the Treaty establishing the European Coal and Steel Community, which is also known as the Treaty of Paris. State aid is prohibited in general terms by Article 4 of that Treaty but Decision 3632/93/ECSC, which is made under Article 95, permits such aid in the limited circumstances detailed in the Decision which include prior Commission approval.

  Mr. Gibb
  To ask the Secretary of State for Trade and Industry if he will provide an analysis of how the figure for state aid for the coal industry was derived. [120111]

  Mrs. Liddell
  As my right hon. Friend the Secretary of State for Trade and Industry indicated in his statement to the House on 17 April 2000,Official Report, columns 697-99, the Government are exploring with the European Commission how state aid might be offered to help the coal industry through this period of transition. We will also be consulting with interested parties on the precise structure of the state aid scheme to be put to the European Commission.
  341W
  The amount of aid paid will depend on the outcome of negotiations with the Commission and coal producers as well as market conditions over the next two years. It is too soon to make any detailed analysis of the costs. I have said that I do not rule out a figure as high as £100 million.

  Mr. Gibb
  To ask the Secretary of State for Trade and Industry if he will list the occasions on which he has discussed with the European Commission the potential for state aid to the coal industry. [120114]

  Mrs. Liddell
  I have discussed the potential for state aid to the coal industry with Commissioner de Palacio. Officials in London and Brussels have discussed the issue with the Commission services. My right hon. Friend the Secretary of State for Trade and Industry has discussed the matter with Commissioner Monti.

  Mr. Gibb
  To ask the Secretary of State for Trade and Industry which interested parties he will be consulting regarding the proposed state aid to the coal industry; and by when the consultation process will be completed. [120112]

  Mrs. Liddell
  My officials will discuss the proposed state aid to the coal industry with major coal producers and coal production trade associations, as well as coal users and traders. This informal consultation process will take place during May this year. Any interested parties should contact David Fielder on 020 7215 5593 or write to the Coal Directorate at Room UG23, 1 Victoria Street, London, SW1H 0ET. We will, of course, also be consulting the European Commission prior to submitting a formal notification of aid.

  Mr. Gibb
  To ask the Secretary of State for Trade and Industry when he expects the European Commission to reach a decision on the legality of the proposed state aid to the coal industry. [120113]

  Mrs. Liddell
  The Government will be discussing a proposed state aid scheme for the coal industry with the European Commission and the coal industry over coming weeks. The Commission has three months from the date on which we submit a formal notification of aid in which to reach a decision. As was said to the House on 17 April 2000,Official Report, columns 697-99, we hope to be making the first payments under the scheme during this financial year.

  Regulations
  Mrs. Browning
  To ask the Secretary of State for Trade and Industry if he plans to adopt the Better Regulation Task Force recommendation of a minimum of three months consultation before regulations are laid before Parliament. [121338]

  Mr. Byers
  We are presently considering the Task Force's recommendations.

  Part-time Work Directive
  Mrs. Browning
  To ask the Secretary of State for Trade and Industry when he will publish guidance on the part-time work directive. [121331]
  342W
  Mr. Byers
  Guidance on the part-time work directive has already been published.

  Mrs. Browning
  To ask the Secretary of State for Trade and Industry what plans he has to widen the scope of the part-time work directive. [121330]

  Mr. Byers
  Our proposals were laid before Parliament on 3 May and we have no plans to widen their scope.

  Fixed-term Contracts
  Mrs. Browning
  To ask the Secretary of State for Trade and Industry when he plans to consult on fixed-term contracts. [121332]

  Mr. Byers
  The fixed-term work directive was agreed on 28 June 1999 and is due to be implemented in the UK by 10 July 2001. The Government plan to consult on their proposals in order to meet this deadline.

  Small Business Council
  Mrs. Browning
  To ask the Secretary of State for Trade and Industry (1) if he will list the business qualifications and experience required for the post of Chairman of the Small Business Council; [121334]

  (2) if he will set out the job specification for the Chairman of the Small Business Council. [121335]

  Mr. Byers
  I refer to the DTI news release of 7 March in which my hon. Friend the Minister of State for Small Business and E-Commerce announced the appointment of William Sargent as the first Chair of the Small Business Council and made clear that his experience makes him well suited for the post.

  BNFL
  Mr. Llew Smith
  To ask the Secretary of State for Trade and Industry what communications he received about the BNFL Safety Action Plan between 18 February and 18 April from British Nuclear Fuels. [120042]

  Mrs. Liddell
  I did not receive communications from BNFL on their proposed responses to the HSE reports between 18 February and 18 April.

  Dr. Jack Cunningham
  To ask the Secretary of State for Trade and Industry what appointments of non-executive directors to the Board of British Nuclear Fuels Limited have not been made under the terms of the Code and Guidance of the Commissioner for Public Appointments; and if he will make a statement. [115995]

  Mrs. Liddell
  [holding answer 27 March 2000]: I refer my right hon. Friend to the answer I gave to him on 20 March 2000, Official Report, column 412W. I am advised that there is one matter concerning the change of status from executive to non-executive director of one director, currently on a short-term appointment, about which my officials are in contact with the Office of the Commissioner of Public Appointments. Unrelated to that matter, however, the company has announced that the director concerned will be leaving the Board at the end of August upon expiry of the term of his appointment.

LORD CHANCELLOR'S DEPARTMENT

  Magistrates Courts
  Mr. Hurst
  To ask the Parliamentary Secretary, Lord Chancellor's Department if he will make a statement on the costs of administering the magistrates courts in England and Wales in each year from 1995 to 1999. [R] [121024]

  Jane Kennedy
  The gross revenue costs of administering the magistrates courts are as follows:

  Year

  £ million

  1995–96

  330

  1996–97

  330

  1997–98

  325

  1998–99

  328

  1999–2000

  1333

  1 Projected

INTERNATIONAL DEVELOPMENT

  Aid
  Dr. Tonge
  To ask the Secretary of State for International Development what plans she has to assess the effectiveness of provision of long-term development aid channelled through non-governmental organisations to countries in conflict. [120764]

  Mr. Foulkes
  None.

EDUCATION AND EMPLOYMENT

  "Ingredients for Success"
  Mr. Robert Jackson
  To ask the Secretary of State for Education and Employment if he will list those who responded to the consultation exercise, "Ingredients for Success". [119464]

  Jacqui Smith
  [holding answer 20 April 2000]: We received and took into account 181 representations in response to "Ingredients for Success". About a quarter of the responses came from nutritionists, about a fifth from local education authorities, and about a further fifth from representative and professional bodies. The remainder came from caterers, school staff, food manufacturers and suppliers, and others (charities and individuals). I will write to the hon. Member with a summary of responses, together with a list of those who responded.

  Correspondence
  Mr. McLoughlin
  To ask the Secretary of State for Education and Employment when the hon. Member for West Derbyshire can expect to receive a reply to the letter he sent on 21 February about Meadows Primary School. [120679]

  Ms Hodge
  A reply was sent to the hon. Member on 27 March 2000.

  Specialist Staff
  Mr. Clappison
  To ask the Secretary of State for Education and Employment what assessment he has made of the provision of specialist staff through Ethnic Minority and Travellers Educational Achievement Grant funding. [121253]

  Jacqui Smith
  The Ethnic Minority and Traveller Achievement Grant (EMTAG) is designed to raise standards for those ethnic minority and traveller pupils at risk of under-achieving and to meet the particular needs of pupils for whom English is an additional language.

  We are making available more money than ever before as part of our drive to raise the academic achievements of those ethnic minority groups at risk of under-achieving. For 2000–01, £162.5 million will be available to local education authorities and schools to improve the attainment of ethnic minority, traveller and refugee pupils—an increase of 7 per cent. on the amount available for these purposes in 1999–2000.

  A key element of the grant programme is that the funding should largely go direct to schools, so that head teachers can use it where it is most needed—to employ more teachers and teaching assistants and to work with their local communities. Specialist teachers, bilingual assistants and other classroom assistants supported through the grant have a vital role to play in raising standards for ethnic minority pupils. We expect that, depending on local needs, a large proportion of the grant will be spent on teachers and classroom assistants. As a requirement of the grant, local education authorities are required to provide information about their plans for spending the grant and details of actual expenditure. We will also monitor the numbers of specialist staff employed by EMTAG through an independent evaluation of the grant.

  Computers for Teachers Initiative
  Mr. Clappison
  To ask the Secretary of State for Education and Employment how many teachers have received computers as a result of his Computers for Teachers initiative. [121252]

  Mr. Wills
  The deadline for teachers' purchase of computers under this scheme was 30 April 2000. To date, some 15,000 applications for subsidy have been received following purchase of computers by teachers. These are being processed, and more are expected. A final figure will be published later this year.

  Grant-maintained Schools
  Mr. Clappison
  To ask the Secretary of State for Education and Employment, pursuant to his answer of 2 May 2000,Official Report, column 92W, what was the pupil: teacher ratio in (a) former grant-maintained primary schools and (b) former grant-maintained secondary schools in each of the last five years. [121270]

  Ms Estelle Morris
  The available information on pupil teacher ratios in maintained primary and secondary schools is shown in the following table.

  The Department is currently collecting information on pupil:teacher ratios in all schools for January 2000. Provisional national estimates for maintained nursery, primary and secondary schools were published in

  345W
  Statistical First Release "Pupil: Teacher ratios in maintained schools in England (14/2000)" on 12 April 2000, a copy of which is available from the Library. Final data will be published in a statistical volume in September.

  Pupil:teacher ratios in maintained primary and secondary schools:1995–99—Position as at January

  England

  Year

  Number of schools

  Full-time equivalent Pupil
  2

  Full-time equivalent qualified Teacher
  3

  Pupils Teachers ratio
  4

  All maintained primary schools
  1

  1999

  18,234

  4,300,563

  182,646

  23.5

  1998

  18,312

  4,300,388

  181,394

  23.7

  1997

  18,392

  4,271,131

  182,442

  23.4

  1996

  18,480

  4,232,514

  182,626

  23.2

  1995

  18,551

  4,159,021

  181,910

  22.9

  All maintained secondary schools
  1

  1999

  3,560

  3,121,901

  183,578

  17.0

  1998

  3,567

  3,072,822

  181,853

  16.9

  1997

  3,569

  3,041,584

  181,692

  16.7

  1996

  3,594

  3,010,416

  180,868

  16.6

  1995

  3,614

  2,992,857

  181,445

  16.5

  Grant-maintained primary schools

  1999

  511

  142,478

  6,056

  23.5

  1998

  508

  139,619

  5,947

  23.5

  1997

  483

  131,712

  5,656

  23.3

  1996

  448

  120,319

  5,214

  23.1

  1995

  410

  107,803

  4,731

  22.8

  Grant maintained secondary schools

  1999

  668

  641,774

  38,514

  16.7

  1998

  667

  625,781

  38,030

  16.5

  1997

  652

  602,936

  36,838

  16.4

  1996

  642

  579,924

  35,493

  16.3

  1997

  622

  553,007

  34,154

  16.2

  1 Includes local education authority (LEA) maintained and grant-maintained schools.

  2 Includes all full-time pupils and full-time equivalent of part time pupils (each part-time pupil is treated as 0.5 full-time equivalents).

  3 Includes all full-time qualified teachers and full-time equivalent of part time qualified teachers (the directed hours of part-time teachers are converted to full-time equivalent teacher numbers by dividing by 32.5)

  4 The Pupil: Teacher ratio relates the full-time equivalent number of pupils to the full-time equivalent number of qualified teachers.

  Key Stage 2
  Mr. Wyatt
  To ask the Secretary of State for Education and Employment what reliability data are available for the end of Key Stage 2 tests; and for what reason they are not published. [121091]

  Ms Estelle Morris
  It is unclear what reliability data are referred to in this question.

  Test reliability relates to how a test question is answered by children or pupils and how consistently it is interpreted in the way anticipated. This aspect of the test question performance is dealt with by means of pre-testing the questions—a process which occurs twice during the life-cycle of a test question. The Government are satisfied that the quality control procedures for the test development and the marking process is thorough and rigorous. This was reflected in the findings of the Rose Review, an independent cross-party panel set up last year to consider the test development and assessment arrangements at Key Stage 2. The data are not published
  346W
  as they form part of the overall process of judging how well a question performs—which takes into account other, judgmental factors.

  Reliability in marking relates to the construction of the mark scheme and how markers interpret the answers to questions. Absolute reliability is achieved when any marker, trained in the use of a markscheme, marks a question and gives it the same mark as any other marker who may mark the same question. Marker training is intended to ensure that marker reliability is as high as possible. Data are collected from markers and analysed each year in relation to the degree of variation from absolute reliability which occurs. The data are used to manage the marking process and remove any markers which may not be performing satisfactorily. As the data relates to individual teachers, they remain confidential.

  The Qualifications and Curriculum Authority publish the findings from their annual evaluation of the test administration procedure.

  Mr. Wyatt
  To ask the Secretary of State for Education and Employment how many end of Key Stage 2 English test papers were returned for a review of marking in each of the past four years. [121089]

  Ms Estelle Morris
  Data are available only for the past three years:

  1999: 4,974

  1998: 4,095

  1997: 1,881

  Bearing in mind the cohort sizes of approximately 600,000 pupils, these figures represent a very small percentage.

  Mr. Wyatt
  To ask the Secretary of State for Education and Employment how many end of Key Stage 2 English test papers were returned for a review of marking last year; and what proportion of these resulted in a change of National Curriculum level. [121088]

  Ms Estelle Morris
  In 1999, 4,974 end of Key Stage 2 English papers were returned for a review of marking. This figure represents approximately 0.8 per cent. of the total number of English papers taken nationally.

  45 per cent. of these reviews resulted in a change of National Curriculum level.

  Age Discrimination
  Mr. Willis
  To ask the Secretary of State for Education and Employment what plans he has to ensure that his Department avoids operating policies which result in age discrimination. [121087]

  Ms Hodge
  We are committed to eliminating age discrimination from the Department's policies and practices in line with the "Code of Practice on Age Diversity in Employment", published in June 1999. We are conducting a full review of all our personnel procedures to ensure they are consistent with the standards set out in the code.

  In addition, in line with our commitments to equality of opportunity, the Department already recruits and promotes people on the basis of their competence to do the job without reference to their age through full fair and open competitions; encourages all staff to take advantage

  347W
  of learning and development opportunities; and has given its staff greater flexibility to choose when they retire between the ages of 60 and 65.

  As part of the Department's commitment to continuous improvement, we are currently carrying out a review of the way we ensure that equal opportunities issues, including age, are taken into account in the development of all our policies.

  GCSE Courses
  Mr. Willis
  To ask the Secretary of State for Education and Employment what plans he has to abolish the agricultural, horticultural and nautical studies GCSE courses offered by the NEAB. [121086]

  Mr. Wicks
  The Qualifications and Curriculum Authority (QCA) is currently working with the awarding bodies to develop advice on the list of approved GCSE titles to be offered from 2001. QCA is seeking the views of interested organisations before submitting final recommendations. No decisions have been reached at this stage. There is a wide range of vocationally-related qualifications in agriculture and horticulture already available, including GNVQs in land and environment. We shall ensure that there continues to be an appropriate range of qualifications in all three areas in the future for young people.

  Post-16 Education
  Mr. Clappison
  To ask the Secretary of State for Education and Employment what was the staying-on rate for post-16 years education in respect of pupils from schools(a) with and (b) without sixth forms in each of the last five years. [120917]

  Mr. Wicks
  The Department does not collect administrative data on 16-year-olds in education by the type of school attended the previous year. However, estimates of the proportion of 16-year-olds in full-time education in the Spring following Year 11, with a breakdown by school type, are available from the Youth Cohort Study. Estimates for the latest years are given in the following table.

  Proportion of 16-year-olds in full-time education1 in maintained schools at Year 11, England

  Percentage

  1994

  1996

  1998

  School without sixth form

  64

  65

  62

  School with sixth form

  73

  73

  71

  1 The figures do not include those studying part-time.

  Source:

  Youth Cohort Study, Cohorts 7, 8, 9

  Mr. Boswell
  To ask the Secretary of State for Education and Employment when he will publish the latest updated timetable for the transition plan for changes in delivery of post-16 years education. [120829]

  Mr. Wicks
  [holding answer 8 May 2000]: We have been working with partner organisations to update the National Transition Plan. The next version will reflect important announcements we made at the end of March on handling the staffing implications of "Learning to Succeed" and the second Funding Consultation
  348W
  Documents which are being issued this week. We intend to publish the next version of the Transition Plan within the next month.

  Mr. Clappison
  To ask the Secretary of State for Education and Employment if he will list the 10 local education authorities with(a) the highest and (b) the lowest rate of pupils staying on for post-16 years education. [120918]

  Mr. Wicks
  We are committed to a step change in participation and attainment rates for 16 and 17-year-olds. The Learning and Skills Bill sets out reforms in post-16 education and training which we believe will make a significant impact. We have announced details of the new Connexions Service which will provide advice, guidance, information and support service for all 13 to 19-year-olds, whatever their needs and circumstances. Five Connexions Service pilots were announced on 3 February 2000 evaluating various aspects of the new service.

  The information requested on participation in education by LEA is contained in the following table. There are no data available on participation in Government Supported Training by LEA but there is evidence that higher rates of training by TEC areas compensate for low levels of full-time education.

  Participation in full-time education of 16-year-olds by LEA, England, 1997–98

  LEA

  Rate

  10 Highest

  Rutland

  94

  Kingston upon Thames

  93

  Sutton

  93

  Redbridge

  88

  Bath and NE Somerset

  87

  Bournemouth

  87

  Hertfordshire

  85

  Bromley

  84

  Barnet

  83

  Hounslow

  83

  10 Lowest

  Derby

  56

  Sheffield

  56

  Sandwell

  54

  Barnsley

  52

  City of Kingston upon Hull

  52

  South Tyneside

  52

  Sunderland

  52

  Knowsley

  51

  Salford

  49

  Stoke on Trent

  49

  Source:

  Statistical Bulletin 14/99: Participation in education and training by young people aged 16 and 17 in each local area and region, England, 1993–94 to 1997–98

  A-levels
  Mr. Clappison
  To ask the Secretary of State for Education and Employment (1) what proportion of candidates aged 18 years or under achieved three or more grade As at A-level in(a) sixth forms in independent schools, (b) sixth forms in maintained schools, (c) sixth form colleges and (d) other further education colleges in the most recent year for which figures are available; [120913]
  349W
  (2) what was the total average points score for candidates aged 18 years or under attempting at least one GCE A-level from (a) school sixth forms in the maintained and independent sectors, (b) sixth form colleges and (c) other further education colleges in the last year for which figures are available. [120919]

  Mr. Wicks
  The proportion of candidates aged 18 years or under that achieved three or more grade As at A-level in England in 1998–99 was:

  (a) 17 per cent. in sixth forms in independent schools

  (b) 6 per cent. in sixth forms in maintained schools

  (c) 5 per cent. in sixth form colleges

  (d) 2 per cent. in other further education colleges.

  The total average points score for candidates aged 18 or under attempting at least one GCE A-level in England in 1998–99 was:

  (a) 17.9 in school sixth forms in the maintained and independent sectors—22.1 for independent schools and 16.6 for maintained schools

  (b) 16.3 in sixth form colleges

  (c) 9.7 in other further education colleges.

  League Cricket
  Mr. Bob Russell
  To ask the Secretary of State for Education and Employment if he will meet representatives of the Lancashire Cricket Board to discuss the regulations relating to the employment of overseas professionals in league cricket. [121266]

  Ms Hodge
  Due to diary commitments, I am unable to meet representatives from the Board. I have arranged for representatives from the Department's Overseas Labour Service to contact the Board to discuss their concerns.

  Mr. Bob Russell
  To ask the Secretary of State for Education and Employment what representations he has received on the employment of overseas professionals in league cricket; and if he will make a statement. [121265]

  Ms Hodge
  I have received a number of letters from Members of Parliament whose constituencies are in Lancashire. The Parliamentary Under-Secretary of State with responsibility for work permit matters and I have given detailed replies explaining the current criteria for the employment of overseas cricketers which were agreed after consultation with the cricketing governing bodies who are responsible for the development of the game in the United Kingdom.

  Mr. Bob Russell
  To ask the Secretary of State for Education and Employment what regulations have been introduced in the past five years which change the existing arrangements whereby overseas professionals can be employed in league cricket; and if he will make a statement. [121264]

  Ms Hodge
  In 1993 criteria were introduced which required an overseas cricketer to have played in at least one first class match, as defined by the International Cricket Council (ICC), to qualify for issue of a work permit to play in league cricket.

  This requirement remained until August 1998 when, after consultations with the English and Wales Cricket Board, the Scottish Cricket Union, and representatives of the League Cricket Conference, the criteria were changed. In order to qualify for a permit a player must have played
  350W
  in a minimum of one test match for his country, or at least three one-day internationals, or at least five first class matches, as defined by the ICC. It was also decided that discretion would be exercised when considering applications for former test match players who did not meet this criteria.

  Work permit arrangements for cricket players are reviewed annually between the Department's Overseas Labour Service and the relevant cricket governing bodies.

  Gifted Children
  Mr. Clappison
  To ask the Secretary of State for Education and Employment what progress has been made with plans for gifted children to sit maths GCSE early under the Maths 2000 project. [121251]

  Ms Estelle Morris
  The National Primary Trust is developing Advanced Maths Centres to enable gifted pupils to take GCSE Mathematics in Year 6, following an out of school hours learning programme. The Trust is currently negotiating with 23 Excellence in Cities partnerships with a view to establishing 10 to 15 centres. Each would cater initially for up to 40 pupils from schools within Excellence in Cities areas. This initial cohort would take GCSE examinations in Summer 2001.

  Deaf and Blind Children
  Mr. Willis
  To ask the Secretary of State for Education and Employment what additional resources, following the recent Budget, he has allocated to local education authorities to support peripatetic teachers of the deaf and blind who support children in mainstream classes. [121329]

  Ms Estelle Morris
  All schools will be free to use the £290 million extra funding announced in the budget as they see fit. It will therefore be open to them to allocate some of the extra funding to employ peripatetic teachers of the deaf and blind, where they have children who would benefit from such support. Funding is also available under Standards Fund grant 18 to support the training and development of teachers of deaf and blind pupils.

  "News Update"
  Mr. Willis
  To ask the Secretary of State for Education and Employment what was the cost of(a) preparation, publication and printing and (b) postage and distribution of "News Update" from his Department; how many copies have been printed; and to whom they have been distributed, in each year since it commenced publication. [121327]

  Mr. Wicks
  "News Update" is produced five times a year. Production costs on average £1,300 per issue, including printing. The print run is 3,500 per issue. Since the first issue in November 1998, the total production costs have been £11,700.

  "News Update" is distributed to MPs, opposition front-bench spokespersons in the House of Lords, Local Education Authority Chairs and Chief Executives, Trade Union General Secretaries, TEC Chief Executives and internally to senior staff at the DfEE and the Employment Service. Much of the distribution is through the DfEE's internal mail network without quantifiable cost. External postage amounts to about £80 per issue.

  Higher Education
  Mr. Boswell
  To ask the Secretary of State for Education and Employment what institutions are currently designated under section 28 of the Further and Higher Education Act 1992; and which of these have(a) been designated and (b) have had their designation withdrawn during the last three years. [120830]

  Mr. Wicks
  [holding answer 8 May 2000]: There are currently 32 designated colleges under section 28 of the Further and Higher Education Act 1992. Of these, 19 are designated under subsection 28(2)(a) as former voluntary aided schools and the remaining 13 colleges were designated under subsections 28(2)(b) and 28(2)(c) and are generally referred to as "specialist designated".

  There have been no new designations since the establishment of the FE sector on 1 April 1993. Three designated colleges have merged since then with other colleges: St. Phillip's Roman Catholic Sixth Form College (now part of South Birmingham College) on 31 August 1995; National Sea Training College (now part of North West Kent College of Technology) on 25 October 1996; and De La Salle College (now part of Pendleton College) on 7 February 1997.

  The full list of designated colleges is as follows:

  Aquinas College, Stockport

  Cardinal Newman College, Preston

  Carmel College, St. Helens

  Christ the King Sixth Form College, Lewisham

  College of Richard Collyer in Horsham, Horsham

  Holy Cross College, Bury

  King Edward VI College, Nuneaton

  King Edward VI College, Stourbridge

  Loreto College, Manchester

  Ludlow College, Ludlow

  Notre Dame Sixth Form College, Leeds

  St. Brendan's Sixth Form College, Bristol

  St. Charles Catholic Sixth Form College, London

  St. Dominic's Sixth Form College, Harrow-on-the-Hill

  St. Francis Xavier Sixth Form College, London

  St. John Rigby Roman Catholic Sixth Form College, Wigan

  St. Mary's College, Blackburn

  St. Mary's RC Sixth Form College, Middlesbrough

  Xaverian College, Manchester

  City Literary Institute, London

  Cooperative College, Loughborough

  Cordwainers College, Hackney

  Fircroft College of Adult Education, Selly Oak

  Hillcroft College, Surbiton

  Marine Society College of the Sea, London

  Mary Ward Centre, London

  Morley College, London

  Northern College for Residential Adult Education, Barnsley

  Plater College, Oxford

  Ruskin College, Oxford

  Worker's Educational Association, London

  Working Men's College, London.

  352W
  Mr. Boswell
  To ask the Secretary of State for Education and Employment how many extra full-time places in higher education have been created in each of the last five years. [120834]

  Mr. Wicks
  [holding answer 8 May 2000]: The available information is given in the table. Plans which distinguish between full and part-time places are available only from the academic year 1999–2000.

  Publicly funded higher education places in England
  1

  FTEs in thousands

  Financial year

  Planned places

  Extra funded places (or reduction)

  1994–95

  941

  —

  1995–96

  961

  20

  1996–97

  1,003

  243

  1997–98

  1,001

  (2)

  1998–99

  1,023

  22

  1999–2000

  1,035

  12

  1 Includes full and part-time, undergraduate and postgraduate students on the basis of full-time equivalents (FTEs). Places shown are those funded through the Higher Education Funding Council for England (HEFCE) or the Teacher Training Agency (TTA), and exclude those in further education colleges funded by the Further Education Funding Council (FEFC).

  2 1996 plans included an additional 28,000 mainstreamed continuing education places, which had previously not been funded.

  Pupil Subsidies (Hardship)
  Mr. Gerald Howarth
  To ask the Secretary of State for Education and Employment what was the cost of(a) free school meals and (b) clothing grants and other subsidies for children attending maintained schools in (i) 1970, (ii) 1980 and (iii) 1999; and if he will estimate how many children in receipt of such benefits came from broken homes. [119771]

  Jacqui Smith
  The Department does not collect this information. However, using data on school meals take-up, we estimate that the cost of providing free school meals in England in the 1999–2000 financial year was over £300 million. The Department did not collect statistics on the take-up of free school meals before 1989, so we cannot estimate their cost in 1970 and 1980. Under education legislation, local education authorities and schools must offer free school meals to those pupils whose parents receive income support or income-based Jobseeker's Allowance. We do not collect data on the numbers of eligible pupils from broken homes.

  Local education authorities have discretionary powers to offer clothing grants and other miscellaneous subsidies to children in cases of hardship. It is for each authority to set its own eligibility criteria for grant, in the light of local needs and circumstances. The Department does not collect data on these grants.

  Performance and Assessment
  Mr. Hilary Benn
  To ask the Secretary of State for Education and Employment what assessment he has made of the recent research by David Jesson of the Centre for Performance Evaluation and Resource Management at the University of York; and if he will make a statement. [119922]
  353W
  Jacqui Smith
  An analysis by the Department's Analytical Services has shown that, broadly speaking on average points scores, the most able 25 per cent. of pupils achieved the same result in selective and non-selective schools.

  David Jesson's research is a further contribution to this debate.

  Special Schools
  Mrs. Curtis-Thomas
  To ask the Secretary of State for Education and Employment how many(a) primary and (b) secondary special schools have closed since 1995 in each local education authority. [119539]

  Jacqui Smith
  [holding answer 17 April 2000]: The table sets out the number of maintained special schools which have closed in each local education authority area since 1995. It does not include those authorities where no such closures have taken place. It includes closures which have been approved but which have not yet taken place. But the closure of some special schools is usually followed by the opening of others, or by the establishing of special units within mainstream schools.

  While there are some special schools which cater for pupils wholly of primary school age, or wholly of secondary school age, there are many others which cover both phases, so it is not possible to split the figures between primary and secondary.

  Table of local authorities showing number of special schools approved for closure or closed since 1995

  Local education authority

  Number

  Avon

  1

  Barking

  3

  Barnet

  1

  Barnsley

  3

  Bedfordshire

  1

  Birmingham

  5

  Blackburn

  2

  Bolton

  2

  Bradford

  1

  Bristol

  2

  Bromley

  1

  Bury

  1

  Cambridgeshire

  2

  Camden

  4

  Cheshire

  1

  Derbyshire

  4

  Durham

  8

  Essex

  5

  Gateshead

  4

  Gloucestershire

  4

  Hackney

  1

  Hampshire

  2

  Haringey

  1

  Harrow

  2

  Hertfordshire

  4

  Islington

  1

  Kingston upon Hull

  2

  Kirklees

  1

  Knowsley

  2

  Lambeth

  4

  Lancashire

  3

  Leeds

  3

  Lewisham

  1

  Liverpool

  11

  Manchester

  2

  Merton

  1

  Newcastle upon Tyne

  10

  354W

  Table of local authorities showing number of special schools approved for closure or closed since 1995

  Local education authority

  Number

  Newham

  6

  North Lincolnshire

  2

  North Somerset

  2

  Northumberland

  2

  Nottingham City

  7

  Oldham

  3

  Oxfordshire

  2

  Peterborough

  1

  Rochdale

  1

  Salford

  3

  Sandwell

  1

  Sheffield

  3

  South Gloucestershire

  2

  Southwark

  1

  St. Helens

  2

  Staffordshire

  2

  Stockport

  4

  Sunderland

  1

  Telford and Wrekin

  4

  Tower Hamlets

  2

  Trafford

  6

  Wakefield

  2

  Walsall

  1

  Waltham Forest

  1

  Wandsworth

  3

  Warwickshire

  5

  Westminster

  1

  Wigan

  5

  Wiltshire

  1

  Total

  185

  Nursery Education
  Mrs. May
  To ask the Secretary of State for Education and Employment how much money has been provided to each local education authority, on a ring-fenced basis, for the provision of nursery places for four-year-olds, since May 1997; and what criteria are used by his Department for the expenditure of that money. [119490]

  Ms Hodge
  [holding answer 17 April 2000]The following table shows the estimated amount of specific grant this Government have provided to each Local Education Authority, since May 1997, for four-year-old early education places, amounting to £631.2 million.

  The criteria for the provision of this funding is set out in the "Requirements of Nursery Education Grant" which is issued to all Local Education Authorities annually. I have placed a copy of this in the Library.

  In addition to this specific grant funding, the table also shows the level of funding provided, since April 1997, for the Under Fives Education Standard Spending Assessment (SSA) sub block, which has increased from £1,089 million in 1997–98 to £1,342 million in 2000–01, an increase of £253 million.

  £

  LEA Number/name

  Specific grant funding for 4 year old places May 1997-March 2000

  Under Fives SSA sub block From 1997–98 to 2000–01

  201 City of London

  44,239

  525,635

  202 Camden

  2,447,710

  26,199,350

  203 Greenwich

  2,773,478

  34,439,251

  204 Hackney

  2,980,044

  42,099,645

  355W

  £

  LEA Number/name

  Specific grant funding for 4 year old places May 1997-March 2000

  Under Fives SSA sub block From 1997–98 to 2000–01

  205 Hammersmith and Fulham

  1,636,268

  22,208,333

  206 Islington

  2,114,722

  32,213,647

  207 Kensington and Chelsea

  1,032,706

  16,291,874

  208 Lambeth

  3,070,930

  47,315,973

  209 Lewisham

  3,130,106

  41,799,656

  210 Southwark

  3,167,629

  49,295,463

  211 Tower Hamlets

  2,146,908

  44,930,632

  212 Wandsworth

  3,867,737

  36,090,382

  213 Westminster

  1,849,560

  20,979,552

  301 Barking and Dagenham

  1,765,439

  24,125,654

  302 Barnet

  3,614,333

  35,006,253

  303 Bexley

  2,606,279

  24,149,142

  304 Brent

  2,736,491

  39,619,753

  305 Bromley

  5,100,604

  29,248,314

  306 Croydon

  6,048,437

  42,273,609

  307 Ealing

  3,430,661

  42,080,847

  308 Enfield

  3,445,040

  36,796,575

  309 Haringey

  2,429,547

  38,830,346

  310 Harrow

  2,215,048

  22,798,730

  311 Havering

  2,776,425

  22,302,298

  312 Hillingdon

  2,672,244

  23,681,920

  313 Hounslow

  2,013,805

  28,155,892

  314 Kingston-upon-Thames

  1,668,814

  11,962,294

  315 Merton

  2,048,953

  19,245,190

  316 Newham

  3,091,355

  50,441,093

  317 Redbridge

  3,435,180

  27,301,291

  318 Richmond-upon-Thames

  2,362,189

  13,401,432

  319 Sutton

  1,974,014

  15,210,394

  320 Waltham Forest

  2,554,006

  33,335,378

  330 Birmingham

  11,783,384

  139,962,427

  331 Coventry

  3,384,879

  34,287,990

  332 Dudley

  3,710,884

  28,815,226

  333 Sandwell

  2,987,298

  35,453,907

  334 Solihull

  2,397,517

  19,229,377

  335 Walsall

  2,604,948

  28,904,993

  336 Wolverhampton

  2,570,806

  29,114,582

  340 Knowsley

  1,585,878

  23,661,932

  341 Liverpool

  4,907,920

  59,188,289

  342 St. Helens

  1,932,173

  17,927,819

  343 Sefton

  2,947,503

  26,480,973

  344 Wirral

  4,149,910

  33,882,113

  350 Bolton

  2,841,652

  28,236,268

  351 Bury

  2,251,775

  17,048,891

  352 Manchester

  4,457,698

  63,455,403

  353 Oldham

  2,619,319

  26,597,738

  354 Rochdale

  2,254,788

  25,545,335

  355 Salford

  2,707,015

  26,462,617

  356 Stockport

  3,484,095

  25,133,268

  357 Tameside

  2,408,284

  23,291,539

  358 Trafford

  2,865,589

  20,312,104

  359 Wigan

  3,433,156

  28,979,591

  370 Barnsley

  2,187,391

  20,484,099

  371 Doncaster

  2,977,993

  31,382,784

  372 Rotherham

  2,912,829

  24,035,721

  373 Sheffield

  6,057,663

  47,356,406

  380 Bradford

  5,486,859

  61,363,771

  381 Calderdale

  1,942,438

  20,765,966

  382 Kirklees

  4,337,797

  41,447,454

  383 Leeds

  7,960,883

  70,718,825

  384 Wakefield

  3,498,079

  28,404,693

  390 Gateshead

  2,018,410

  19,314,038

  391 Newcastle Upon Tyne

  2,904,090

  28,988,668

  392 North Tyneside

  1,873,911

  18,124,299

  393 South Tyneside

  1,430,236

  16,268,735

  394 Sunderland

  2,823,357

  30,647,773

  420 Isles of Scilly

  24,401

  223,825

  800 Bath and North East Somerset

  2,198,269

  12,718,586

  801 City of Bristol

  4,179,267

  39,699,083

  802 North Somerset

  2,598,843

  13,907,594

  803 South Gloucestershire

  3,442,961

  21,981,555

  805 Hartlepool

  950,625

  10,341,339

  806 Middlesbrough

  1,534,150

  18,459,150

  807 Redcar and Cleveland

  1,400,437

  15,375,552

  808 Stockton on Tees

  1,898,200

  19,105,620

  810 Kingston Upon Hull

  2,903,707

  30,263,632

  811 East Riding of Yorkshire

  3,573,101

  23,043,212

  812 North East Lincolnshire

  1,809,580

  36,801,075

  813 North Lincolnshire

  1,602,657

  14,175,583

  356W

  £

  LEA Number/name

  Specific grant funding for 4 year old places May 1997-March 2000

  Under Fives SSA sub block From 1997–98 to 2000–01

  815 North Yorkshire

  6,545,160

  44,474,348

  816 City of York

  2,026,232

  13,483,553

  820 Bedfordshire

  5,478,779

  32,620,541

  821 Luton

  2,362,532

  23,342,271

  825 Buckinghamshire

  7,145,460

  36,818,705

  826 Milton Keynes

  3,793,569

  18,601,327

  830 Derbyshire

  7,882,768

  56,773,285

  831 City of Derby

  2,631,137

  24,323,450

  835 Dorset

  5,964,663

  25,105,447

  836 Poole

  2,198,869

  10,824,072

  837 Bournemouth

  2,397,719

  11,566,800

  840 Durham

  4,731,876

  46,614,569

  841 Darlington

  1,184,119

  10,096,485

  845 East Sussex

  6,174,647

  37,623,254

  846 Brighton and Hove

  2,955,123

  21,053,357

  850 Hampshire

  19,734,237

  105,388,667

  851 Portsmouth

  2,631,819

  19,972,766

  852 Southampton

  2,667,163

  22,898,940

  855 Leicestershire

  8,459,289

  42,050,808

  856 City of Leicester

  3,376,784

  37,494,284

  857 Rutland

  431,985

  2,267,346

  860 Staffordshire

  8,843,720

  66,060,025

  861 Stoke on Trent

  2,395,675

  24,933,123

  865 Wiltshire

  7,039,003

  24,059,879

  866 Swindon

  3,528,047

  17,156,587

  867 Bracknell Forest

  2,146,276

  8,643,081

  868 Windsor and Maidenhead

  2,685,865

  19,969,052

  869 West Berkshire

  1,997,405

  9,761,799

  870 Reading

  1,579,927

  12,693,025

  871 Slough

  625,883

  15,076,047

  872 Wokingham

  3,078,414

  9,333,372

  873 Cambridgeshire

  7,071,693

  45,390,961

  874 Peterborough

  2,910,513

  19,057,525

  875 Cheshire

  11,322,430

  56,519,961

  876 Halton

  1,244,530

  14,060,951

  877 Warrington

  4,185,917

  18,084,822

  878 Devon

  10,254,437

  49,728,187

  879 Plymouth

  3,874,095

  22,639,526

  880 Torbay

  1,493,816

  10,092,027

  881 Essex

  17,727,923

  110,200,579

  882 Southend-on-Sea

  2,230,039

  16,388,210

  883 Thurrock

  1,313,651

  15,127,821

  884 Herefordshire

  2,490,837

  13,154,133

  885 Worcestershire

  8,782,704

  41,417,451

  886 Kent

  20,422,401

  122,161,732

  887 Medway Towns (R and G)

  2,156,170

  26,508,014

  888 Lancashire

  16,605,957

  107,804,099

  889 Blackburn with Darwen

  1,297,803

  19,905,426

  890 Blackpool

  2,076,049

  14,023,959

  891 Nottinghamshire

  9,647,913

  53,218,304

  892 City of Nottingham

  2,529,142

  32,514,913

  893 Shropshire

  4,541,257

  18,408,566

  894 Telford and Wrekin

  1,392,112

  14,919,311

  908 Cornwall

  5,728,739

  35,616,608

  909 Cumbria

  5,010,134

  42,532,605

  916 Gloucestershire

  8,751,420

  47,048,781

  919 Hertfordshire

  13,729,335

  95,207,322

  921 Isle of Wight

  2,118,616

  10,961,727

  925 Lincolnshire

  5,808,892

  52,483,372

  926 Norfolk

  9,427,151

  41,930,030

  928 Northamptonshire

  8,194,925

  58,586,326

  929 Northumberland

  2,888,327

  25,987,204

  931 Oxfordshire

  8,959,795

  42,953,283

  933 Somerset

  7,133,883

  39,937,579

  935 Suffolk

  9,199,437

  49,416,913

  936 Surrey

  16,018,864

  84,705,754

  937 Warwickshire

  6,494,790

  41,153,322

  938 West Sussex

  12,400,914

  54,837,210

  Total

  631,196,266

  4,887,492,000

  Note:

  Specific grant funding provided in 1997–98 to LEAs that no longer exist have been distributed across the new LEA areas. Where there is more than one new area it has been distributed according to the percentage of funding the new areas received in 1998–99 and 1999–2000.

  Human Rights and Disability
  Mr. Boswell
  To ask the Secretary of State for Education and Employment what response he has made to the National Disability Council's report on Human Rights and Disability. [120832]

  Ms Hodge
  [holding answer 8 May 2000]: The report "The Impact of the Human Rights Act on Disabled People" was prepared for, and recently published by, the National Disability Council and The Royal National Institute for Deaf People. The NDC has sent copies to the Chairs of the Disability Rights Commission, the Commission for Racial Equality, the Equal Opportunities Commission and to Northern Ireland's Equality Commission and Human Rights Commission and to a range of disability and other organisations, as a contribution to the debate on the human rights legislation.

  It is an interesting report and we are considering how best to make use of the material that it contains.

  Learning Accounts
  Mr. Boswell
  To ask the Secretary of State for Education and Employment when he will introduce the national arrangements for issuing individual learning accounts; who is the contractor selected; how many people have applied to individual TECs and remain on a waiting list; and what criteria will be applied for entitlements, including those in connection with transport and child care costs. [120833]

  Mr. Wicks
  [holding answer 8 May 2000]: I can answer most of the hon. Member's question by referring him to the replies I have given to the previous parliamentary questions of 3 April and 4 May 2000, Official Report, columns 295W and 196W respectively.

  Our latest figures show that in England, over 117,000 accounts had been opened by the end of March 2000. This is against a UK target of 100,000 accounts opened by April 2000, and we are on track to achieve the target of 1 million accounts opened in the lifetime of this Parliament.

  I am pleased to announce that the Department has issued a letter of intent to Capita Group to start the development of these services under the national framework.

  From April, we have been offering 80 per cent. discounts for computer literacy courses through Further Education colleges in England. Anyone aged 19 or over can open a learning account and claim the incentives. When deciding eligibility for the incentives, we will take into account the type of learning people plan to undertake and any Government financial support they already get for their chosen learning. Child care and transport costs will not be eligible for the incentives.

ENVIRONMENT, TRANSPORT ANDTHE REGIONS

  Regional Development Agencies
  Mr. Sheerman
  To ask the Secretary of State for the Environment, Transport and the Regions what arrangements he has made to monitor the performance of regional development agencies. [120154]
  358W
  Ms Armstrong
  We developed an interim evaluation and performance monitoring framework for the Regional Development Agencies (RDAs) prior to their establishment on 1 April last year. This framework included a set of core indicators that reflected the purposes for which the RDAs were set up, to be used by the RDAs in developing their regional strategies.

  We undertook to review the interim framework within 18 months of the establishment of the RDAs, and we have recently started to take this review forward.

  A38 Bypass
  Mr. Breed
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on his bypass programme for the A38. [120155]

  Mr. Hill
  The Dobwalls bypass and the Saltash-Stoketon Cross improvement schemes are being considered under the London to South-West and South Wales multi-modal study. The outcome of the study will inform consideration of transport infrastructure requirements in preparing Regional Planning Guidance, including the need for improvements to the trunk road network.

  New Houses (South-East)
  Mr. Burns
  To ask the Secretary of State for the Environment, Transport and the Regions what representations he has received on his proposals for housebuilding in the South-East. [120156]

  Mr. Raynsford
  My right hon. Friend the Secretary of State is just beginning to receive representations on his proposals. These are subject to public consultation until 19 June. He expects to receive further representations to his "Proposed Changes to Draft Regional Planning Guidance" (RPG9) during the course of the consultation period.

  Trans-European Road Network
  Mr. Paterson
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on investment in Trans-European Network roads. [120157]

  Mr. Hill
  Parts of the national trunk road network have also been designated as Trans-European Network (TEN) routes. Our plans for investment in the trunk road network were set out in "A New Deal for Trunk Roads in England".

  Air Pollution
  Mr. Colman
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on Government policy concerning the emission of greenhouse gases by aircraft within UK jurisdiction. [120158]

  Mr. Mullin
  Emissions from aircraft on domestic flights are already included in the UK totals and targets. The draft Climate Change Programme, published in March, sets out our plans for delivering the UK's target under the Kyoto Protocol and moving towards our
  359W
  domestic goal of a 20 per cent. cut in carbon dioxide emissions by 2010. We are also working in ICAO towards the reduction of emissions from international aviation.

  Fishing Vessels (Safety)
  Dr. Godman
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he has to modify the regulations governing the safety of the crews of United Kingdom-registered fishing vessels. [120160]

  Mr. Hill
  We have recently introduced the Fishing Vessels (EC Directive on Harmonised Safety Regime) Regulations 1999, and we are continuing to implement occupational health and safety directives. We propose to introduce a safety code for under-12m fishing vessels and to review the UK Fishing Vessel (Safety Provisions) 1975.

  Transatlantic Aviation Market
  Mr. Nicholas Winterton
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he has to raise the full liberalisation of the transatlantic aviation market at the bilateral talks with the United States in June. [120161]

  Mr. Mullin
  The Government will persist in their efforts to secure the liberalisation of the UK/US aviation market at the next round of formal talks to be held in June.

  Cheam Station
  Mr. Burstow
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make improvements to the condition and fabric of Cheam station a condition of the re-award of the relevant franchise. [120162]

  Mr. Hill
  As the hon. Gentleman will know from the recent adjournment debate about the replacement of the Connex South Central franchise, my right hon. Friend the Deputy Prime Minister has issued instructions to the Franchising Director asking him to deliver improvements through renegotiation of franchise agreements. The replacement bids for this franchise must include proposals for improved station facilities and a cleaner, safer station environment.

  Green Belt
  Mr. Clappison
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he has to protect existing green belt areas. [120163]

  Mr. Raynsford
  Planning Policy Guidance note 2 already states that land in designated green belts should be protected against inappropriate development. Local planning authorities must take it into account in preparing their development plans and in individual development control decisions.

  Climate Change
  Dr. Gibson
  To ask the Secretary of State for the Environment, Transport and the Regions what recent research he has commissioned to determine the effects of climate change on human health. [120164]
  360W
  Mr. Meacher
  My Department supports research on the global impacts of climate change on human health from the London School of Hygiene and Tropical Medicine. The Department of Health has commissioned a report from the Institute for Environment and Health on the possible impacts of climate change on health in the UK.

  Railtrack Safety Company
  Mrs. Dunwoody
  To ask the Secretary of State for the Environment, Transport and the Regions when the safety company of Railtrack will be incorporated; and when the managing director will be appointed. [120165]

  Mr. Hill
  The Health and Safety Executive and the Rail Regulator will shortly be starting a statutory consultation on changes to Regulations and to Railtrack's licence necessary to enable the new company to function. I understand that Railtrack is proceeding as far as it can with the arrangements for setting up the new company.

  Regeneration
  Mr. Coaker
  To ask the Secretary of State for the Environment, Transport and the Regions what steps the Government are taking to ensure that disadvantaged neighbourhoods outside the inner cities benefit from regeneration programmes. [120166]

  Ms Beverley Hughes
  Renewing and revitalising poor neighbourhoods has consistently been a high priority for this Government and a consultation framework on the National Strategy for Neighbourhood Renewal was published by the Social Exclusion Unit in April. We are already addressing the needs of disadvantaged neighbourhoods outside the inner cities through the Single Regeneration Budget but the future role of all the regeneration programmes is being considered in the current spending review.

  Fifth Freedom Rights
  Sir Sydney Chapman
  To ask the Secretary of State for the Environment, Transport and the Regions which non-United Kingdom and non-United States carriers have received further fifth freedom rights from the UK in the last year; and which applications are still outstanding. [120167]

  Mr. Mullin
  In the last year the UK has granted new fifth freedom traffic rights, or additional frequencies to existing rights, to the designated airline or airlines of the following countries:

  Bahrain

  Bangladesh

  Greece

  India

  Luxembourg

  Mauritius

  Namibia

  Pakistan

  Uganda.

  Requests for new fifth freedom rights are often made in the course of negotiations but are then not pursued.

  Regional Airports (Access)
  Tony Lloyd
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on access by non-UK carriers to regional airports. [120168]

  Mr. Mullin
  Since June 1998 all bilateral partners with whom we did not already have liberal air services agreements have been offered unrestricted access to all UK regional airports, so long as UK airlines are also allowed to operate on the same routes. Some 17 countries have accepted the offer, and it has been discussed in virtually all air services negotiations held since June 1998.

  Organophosphates
  Mr. Tyler
  To ask the Secretary of State for the Environment, Transport and the Regions if he will circulate the revised HSE Guidance Note MS17, entitled "Medical Aspects of Work-Related Exposure to Organophosphates", to(a) potential users of organophosphates and (b) GPs. [120169]

  Mr. Meacher
  No. MS17 is a priced publication available on that basis to anyone, but it is written for doctors and other health professionals and would not be helpful to the general user of organophosphates. All GPs are being made aware of its existence, but it would be wasteful to distribute it to the many who will have no cause to refer to it.

  Transport for London
  Wilkinson
  To ask the Secretary of State for the Environment, Transport and the Regions when he intends to meet the Mayor of London to discuss the entry into operation of Transport for London. [120170]

  Mr. Hill
  My right hon. Friend will be meeting the Mayor of London in due course to discuss a range of issues, including transport.

  Thames Gateway
  Mr. Paul Clark
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the future development of the Thames Gateway. [120171]

  Ms Beverley Hughes
  My right hon. Friend the Deputy Prime Minister announced on 7 March that the Thames Gateway remains a focus for development and an opportunity for growth in the south-east. Draft Regional Planning Guidance published on 22 March identifies the regeneration of the area as a national and regional priority and proposes an extension of the boundary into south Essex. Stronger implementation structures, including a new strategic partnership and local delivery mechanisms, are being discussed with local and regional organisations in the area.

  Local Authority Debt
  Mr. Clifton-Brown
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the trend in the level of external local authority debt in the last three years for which figures are available. [120172]
  362W
  Ms Beverley Hughes
  The trend in the level of external debt of local authorities in England is broadly flat. Total external debt has been estimated at about £37 billion at end March in each of the years 1997, 1998 and 1999.

  Second and Holiday Homes
  Mr. Andrew George
  To ask the Secretary of State for the Environment, Transport and the Regions what estimate he has made of the extent of(a) second and (b) holiday home ownership in England and Wales; and if he will make a statement. [120173]

  Mr. Mullin
  Estimates based on the Survey of English Housing (SEH) indicate that there were about 234,000 English households who owned second homes in England and Wales in 1998–99.

  Some 46 per cent. of SEH respondents owning a second home included "holiday home/retirement home/weekend cottage" as one of their reasons for having the second home. This would indicate a figure for holiday home ownership of around 108,000.

  There is no comparable recent and reliable source of information on people whose main residence is in Wales who have a second home in England or Wales.

  Packaging Waste
  Jane Griffiths
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the packaging waste compliance scheme registration fee structure. [120174]

  Mr. Meacher
  In the light of experience with the current arrangements, we intend to consult shortly on an alternative structure for registration fees for compliance schemes.

  NATS Employees (Share Allocation)
  Mr. Gordon Prentice
  To ask the Secretary of State for the Environment, Transport and the Regions how many shares are to be allocated to NATS employees under the arrangements proposed in the Transport Bill. [120175]

  Mr. Mullin
  The Government propose that 5 per cent. of NATS shares are to be made available for an employee share scheme. Details will be worked up in due course following consultation with NATS' employee representatives and, when selected, the strategic partner.

  Regional Development Agency(Yorkshire and Humberside)
  Kali Mountford
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the work of the regional development agency in the Yorkshire and Humberside region. [120176]

  Ms Beverley Hughes
  The Government have set Yorkshire Forward the challenging task of leading the revitalisation of the Yorkshire and Humber economy. The first step towards this goal was made with the production of a Regional Economic Strategy. The strategy, a well structured framework for promoting economic development and competitiveness in the region, was welcomed by the Government earlier this year.
  363W
  Yorkshire Forward is now working with other partners to develop a series of Action Plans to take forward key actions in the Strategy. At the same time, Yorkshire Forward has made good use of its programme funding to secure new investment in the region, to create new jobs and to address the skills gap.

  Workplace Parking Tax
  Mrs. Spelman
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the likely impact of the proposed workplace parking tax on local economies. [120177]

  Mr. Hill
  Research indicates that a levy on workplace parking can help to tackle traffic congestion. Less congestion will help to improve the competitiveness of local economies. In addition, the hypothecation of the revenues raised for improving local transport will help to maintain their vitality.

  We will require local authorities that choose to bring forward a workplace parking levy scheme to assess the likely impact of their scheme, including its effect on the local economy, before the Secretary of State approves the order to give effect to the scheme.

  Village Speed Limits
  Mr. Rendel
  To ask the Secretary of State for the Environment, Transport and the Regions if he will list those authorities which have completed the introduction of a programme of village speed limits throughout their area. [120178]

  Mr. Hill
  The setting of local speed limits is a matter for local authorities who are not obliged to inform central Government of the number or whereabouts of local speed limits they have in force.

  CITES
  Mr. Burgon
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the outcome of the Conference of the Parties to the Convention on International Trade in Endangered Species which took place in Gigiri, Kenya, from 10 to 20 April. [121623]

  Mr. Meacher
  A record 130 countries attended the Conference, which took place in a positive and friendly atmosphere in the excellent facilities provided at UNEP HQ.

  The Conference considered 62 proposals to amend the species covered by CITES, which are listed in two Appendices. Appendix I lists highly endangered species which are prohibited in international commerce. Appendix II lists other endangered species in the table, which includes details of the final position taken by the

  Species—scientific name

  Species—common name

  Proposal

  UK/EU final position

  Outcome

  Fauna

  Crocodylus niloticus (Tanzania pop.)

  Nile crocodile

  Increase export quota for wild-taken specimens

  Support

  Adopted

  Manis crassicaudata

  Indian pangolin

  Uplist (AH to AI). Amended to remain in All with zero wild quota

  Support as amended

  Adopted as amended

  Manis pentadactyla

  Chinese pangolin

  Manis javanica

  Malayan pangolin

  364W
  UK (in accordance with the EU' s common position) on those proposals which were put to the Conference for decision.

  The UK achieved its main objective on the key proposals for elephants, turtles and whales. Our own proposal to list the basking shark on Appendix II achieved 61 per cent. support—the highest vote for any of the three shark proposals before the Conference. Unfortunately a two-thirds majority was required and the majority of states which use basking shark fins voted against our efforts to ensure that fisheries were managed sustainably and trade levels monitored.

  We were particularly disappointed that representatives from the Food and Agriculture Organisation (FAO) intervened in the debate on behalf of overseas fishing industry interests, and partly disowned their own technical report which showed that species like the basking shark are particularly suitable for CITES management. Given the continuing threat to this species, and the strength of our scientific case which was widely acknowledged, the Government intend to work with our European Union colleagues to list the basking shark on Appendix III of CITES as soon as possible. If agreed, this would make any transaction between the EU and other states in basking shark products subject to the EU CITES Regulations.

  Another major UK proposal at the Conference—to establish a working group to address unsustainable trade in bushmeat—has been strongly endorsed. Initially, the working group will focus on the management of bushmeat harvesting and trade in six African countries with particular problems such as dislocation caused by irresponsible forest exploitation by international timber companies and unsustainable demand for bushmeat from urban areas. My Department is making £50,000 available in the current financial year to support this initiative, and we look forward to contributions from other CITES Parties and non-Governmental bodies.

  I would also like to highlight two other UK achievements at the Conferences. First we ensured that most of the tough recommendations made in the recent CITES Tiger Missions, led by the UK, were endorsed and that countries which fail to implement them can as a last resort face wildlife trade sanctions. As a potential consumer state, the UK will continue to maintain a vigilant profile through education, detection and prosecution to prevent any revival in the use of tiger products for traditional medicine in this country. Secondly, I would like to pay tribute to representatives of HM Customs and Excise and the Police who organised a widely praised exhibition of the UK's work to enforce CITES. Two recent convictions in the UK for illegal trade in shahtoosh and parrots have demonstrated the increasing commitment of statutory enforcement agencies to tackle wildlife crime. I hope that the proposed Wildlife Crime Unit, which I announced on 16 February, will enable us to build on these achievements.
  365W

  Species—scientific name

  Species—common name

  Proposal

  UK/EU final position

  Outcome

  Tursiops truncatus ponticus

  Black Sea Bottle Nosed Dolphin

  Uplist (AII to AI)

  Abstain

  Withdrawn

  Eschrichtius robustus (Eastern N. Pacific stock)

  Grey Whale

  Downlist (to AII)

  Oppose

  Rejected

  Balaenoptera acutorostrata (S. Hemisphere stock)

  Minke Whale

  Downlist (to AII)

  Oppose

  Rejected

  Balaenoptera acutorostrata (Okhotsk Sea—W. Pacific stock)

  Minke Whale

  Downlist (to AII)

  Oppose

  Rejected

  Balaenoptera acutorostrata (NE Atlantic, N. Atlantic Central stock

  Minke Whale

  Downlist (to AII)

  Oppose

  Rejected

  Parahyaena brunnea

  Hyaena

  De-list (from AII)

  Support

  Adopted

  Loxodonta africana (South African pop.)

  African Elephant

  Downlist (to AII). Non-ivory trade only

  Support as amended

  Adopted as amended

  Loxodonta africana (Botswanan pop.)

  African Elephant

  Commercial ivory quota

  Oppose

  Withdrawn

  Loxodonta africana (Namibian pop.)

  African Elephant

  Commercial ivory quota

  Oppose

  Withdrawn

  Loxodonta africana (Zimbabwean pop.)

  African Elephant

  Commercial ivory quota

  Oppose

  Withdrawn

  Loxodonta africana (App. II pops.)

  African Elephant

  Uplist (AII to AI)

  Oppose

  Withdrawn

  Loxodonta africana (App. II pops.)

  African Elephant

  Annotation amendment (re "appropriate and acceptable destinations")

  Support

  Adopted

  Dugong dugon (Australian pop.)

  Sea Cow

  Uplist (AII to AI)

  Abstain

  Adopted

  Vicugna vicugna (App. I pops.)

  Vicuna

  Downlist (to AII)

  Support

  Withdrawn

  Vicugna vicugna (App. II pops)

  Vicuna

  Delete zero quota for trade in cloth

  Support

  Adopted

  Moschus spp. (App. II pops.)

  Musk deer

  Uplist (to AI)

  Oppose

  Withdrawn

  Ovis vignei (unlisted sub spp.)

  Urial

  List non AI pops, on AII

  Support as amended

  Adopted as amended

  Rhea pennata pennata (Argentine pop.)

  Lesser Rhea

  Downlist (to AII)

  Support

  Adopted

  Falco rusticolus (N. American pop.)

  Gyr Falcon

  Downlist (AI to AII)

  Oppose

  Rejected

  Eunymphicus cornutus cornutus

  Horned Parakeet

  Uplist (AII to AI)

  Support

  Adopted

  Eunymphicus cornutus uveaenisis

  Ouvea Parakeet

  Uplist (AII to AI)

  Support

  Adopted

  Garrulax canorus

  Melodious Laughing Thrush

  List (on AII)

  Oppose (but support AIII)

  Adopted

  Cuora s.l.

  Box Turtles

  List (on AII)

  Support

  Adopted

  Clemmys guttata

  Spotted turtle

  List (on AII)

  Oppose

  Rejected

  Geochelone sulcata

  African spurred tortoise

  Retain AII with zero wild quota

  Support

  Adopted as amended

  Malacochersus tornieri

  Pancake tortoise

  Uplist (AII to AI)

  Support

  Withdrawn

  Eretmochelys imbricata (Carib. pop. in Cuban waters

  Hawksbill Turtle

  Downlist (to AII)

  Oppose

  Withdrawn

  Eretmochelys imbricata (Carib. pop. in Cuban waters

  Hawksbill Turtle

  Downlist (to AII) for one-off sale of shell stocks

  Abstain

  Rejected

  Crocodylus moreletii (Sian Ka'an, Quintana Roo pop.)

  Belize crocodile

  Downlist (to AII)

  n/a

  Withdrawn before the Conference

  Varanus melinus

  Quince monitor lizard

  Uplist (AII to AI)

  Oppose

  Withdrawn

  Crotalus horridus

  Timber rattlesnake

  (List on AII)

  Oppose

  Withdrawn

  Bufo retiformis

  Sonoran green toad

  De-list (from AII)

  Support

  Adopted

  Mantella spp. (except M. aurentiaca)

  Malagasy poison frog

  List (on AII)

  Support

  Adopted

  Rhincodon typus

  Whale shark

  List (on AII)

  Support

  Rejected

  366W 367W

  Species—scientific name

  Species—common name

  Proposal

  UK/EU final position

  Outcome

  Carcharodon carcharias

  Great white shark

  List (on AI)

  Support AII

  Rejected

  Cetorhinus maximus

  Basking shark

  List (on AII)

  Support

  Rejected

  Latimeria spp. (except L. chalumnae)

  Coelecanth

  List (on AI)

  Support

  Adopted

  Latimeria menadoensis

  Menado coelacanth

  List (on AI)

  Support (only if above proposal failed)

  Withdrawn

  Poecilotheria spp.

  Ornamental tarantula

  List (on AII)

  Oppose

  Rejected

  Flora

  Popophyllum hexandrum; and Rauvolfia serpentina

  Combine with annotation for Taxus wallichiana

  Support

  Adopted (also referred to Plants Committee)

  Ceropegia spp.

  De-list (from AII)

  Support

  Adopted

  Frerea indica

  De-list (from AII)

  Support

  Adopted

  Byblis spp.

  Rainbow Plant

  De-list (from AII)

  Support

  Adopted

  Disocatus macdougalli

  McDougal's cactus

  Downlist (to AII)

  Support

  Adopted

  Sclerocactus mariposensis

  Lloyds Mariposa cactus

  Downlist (to AII)

  Support

  Rejected

  Cephalotus follicularis

  Albany pitcher plant

  De-list (from AII)

  Support

  Adopted

  Dudleya stolonifera

  Laguna Beach Liveforever

  Downlist (to AII)

  Support

  Adopted as amended

  Dudleya traskiae

  Santa Barbara Island

  Liveforever

  (a) Cyathea spp. and

  Tree ferns

  (a) amend listing to Cyathea spp. (inc. Alsophila, Nephelea, Sphaeropteris, Trichipteris) and Cibotium barometz

  Support

  Adopted

  (b) Dicksonia spp.

  (b) amend listing to Dicksonia spp. (originating in Americas) and Cibotium barometz

  Shortia galacifolia

  Oconee-Bells

  De-list (from AII)

  Support

  Withdrawn

  Lewisia cotyledon

  Siskiyou Lewisia;

  De-list (from AII)

  Support

  Adopted as amended

  Maguire's Bitter-root;

  Saw-toothed Lewisia

  Darlingtonia californica

  California Pitcher Plant

  De-list (from AII)

  Support

  Adopted

  Panax ginseng (roots)

  Ginseng

  List (on AII)

  Support

  Adopted as amended

  Araucaria araucana (Argentine pop.)

  Monkey puzzle tree

  Uplist (AII to AI)

  Support

  Adopted

  Cactaceae spp.

  De-list (from AII)

  Oppose

  Withdrawn (but decision adopted)

  Kalmia cuneata

  Laurel

  De-list (from AII)

  Support

  Withdrawn

  Camptotheca acuminata

  Happytree

  List (on AII)

  Open

  Withdrawn

  Cistanche deserticola

  Desert living Cistanche

  List (on AII)

  Support

  Adopted as amended

  Harpagophytum procumbens; Harpagophytum zeyheri

  Grapple plant

  List (on AII)

  Support

  Withdrawn

  Adonis vernalis

  Herb of spring adonis

  List (on AII)

  Support

  Adopted as amended

  Guaiacum sanctum

  Brazil wood

  Uplist (to AI)

  Oppose

  Withdrawn (but decision adopted)

  Notes:

  1. AI = Appendix I of CITES (species banned in commerce).

  2. All = Appendix II of CITES (species regulated in commerce)

  Waste Management Licensing
  Mr. Caton
  To ask the Secretary of State for the Environment, Transport and the Regions (1) if he will extend the scope of the Waste Management (Licensing) Regulations so that judgment on fit and proper person status takes into account relevant convictions in other EU countries; [118780]
  368W
  (2) if convictions in other countries are taken into consideration when assessing applicants' fit and proper person status for the purpose of waste management licensing; [118778]

  (3) what relevant convictions under UK law are taken into consideration when assessing applicants for fit and proper person status for the purpose of waste management licensing. [118779]
  369W
  Mr. Meacher
  Offences which are taken into consideration in Great Britain when assessing "fit and proper person" status are those set out in regulation 3 of the Waste Management Licensing Regulations 1994 (S.I. 1994 No. 1056) (as amended). Convictions in other countries are not currently taken into consideration when assessing applicants' fit and proper person status for the purpose of these provisions and waste management licensing. However, we are considering whether the list of relevant offences should be extended to take into account convictions in other EU countries, although there is at present no EU-wide mechanism to support such a system.

  The amendment of the 1994 Regulations in relation to Wales is a devolved function and would be a matter for the National Assembly for Wales.

  Bull Bars
  Mr. Flynn
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he has to ban the use of bull bars on public roads. [120281]

  Mr. Hill
  As stated in our recently published Road Safety Strategy "Tomorrow's Roads—Safer for Everyone", we believe that the anticipated European Commission proposal to make all new car fronts safer would be the best way of preventing particularly dangerous bull bars being fitted to vehicles. We are currently awaiting the opportunity to examine the details of the Commission's draft proposal. We had expected this to be put forward in mid-March, and were disappointed when this proved not to be possible. We are now urging the Commission to bring forward their proposal at the earliest opportunity.

  We are keen to see bull bars tackled as soon as possible, on an effective Europe-wide basis. We are therefore also submitting a scientific proposal to the Commission for bull bars to be controlled by an amendment to the external projections directive as an interim measure.

  Disabled Access (Stations)
  Mr. Pike
  To ask the Secretary of State for the Environment, Transport and the Regions what percentage of(a) London Underground and (b) Railtrack stations have disabled access; what steps are being taken to increase the provision; and if he will make a statement. [120079]

  Mr. Hill
  20 per cent. of London Underground stations have wheelchair access to at least one direction of travel on at least one line. It is anticipated that the number of tube stations with disabled access will increase to 45 per cent. through the PPP contracts.

  22 per cent. of Railtrack stations have wheelchair access from the street. Railtrack has a strategy to make all stations fully accessible to the disabled within 20 years. Railtrack are awaiting the outcome of the Rail Regulator's periodic review of their access charges, which are due later this year, before finalising their programme of improvements.

  Noise Pollution
  Mr. Sheerman
  To ask the Secretary of State for the Environment, Transport and the Regions (1) if he will 370W
  instruct the Highways Agency to prepare plans for noise pollution barriers on the section of the M62 adjoining to Bradley Wood, Huddersfield; [120129]

  (2) what steps he is taking to ensure that noise pollution caused by motorways is reduced. [120128]

  Mr. Hill
  No. The Government set out their policy towards dealing with the problems of traffic noise arising from motorways and other roads managed by the Highways Agency in "A New Deal for Trunk Roads in England". We expect considerable benefits to be achieved by the increased use of quieter surfaces both for new trunk roads and for those needing maintenance. In addition, we have asked the Highways Agency to consider the case for providing noise mitigation in the worst cases where no other action was being taken to provide relief for residential properties. The Government are also supporting the implementation of a proposed EU Directive that will require vehicle tyres to meet noise emission limits.

  Mr. Sheerman
  To ask the Secretary of State for the Environment, Transport and the Regions what arrangements he has made with the Highways Agency to increase sound pollution barriers when stretches of existing motorways are(a) upgraded and (b) modified. [120130]

  Mr. Hill
  The Highways Agency is required to assess the potential adverse effects on the environment of any modifications to existing motorways which involve physical alterations. With regard to noise, the effectiveness of any existing sound barriers will be taken into account and proposals for upgrading them or for alternative measures to be provided in conjunction with the alteration will be considered.

  Open-cast Mining Sites (Scotland)
  Mr. Welsh
  To ask the Secretary of State for the Environment, Transport and the Regions how often open-cast mining sites in Scotland were inspected by the Health and Safety Executive in the last three years; and what plans he has to increase the frequency of inspections in the coming year. [120791]

  Mr. Meacher
  Health and Safety Executive inspectors carry out routine preventative inspections of workplaces according to the hazards and risks of the workplace. With open-cast coal mines such inspections are normally made once per year. In addition an inspector may visit for other reasons, e.g. to investigate an accident or complaint.

  As of 31 March 2000 there were 106 open-cast coal mines registered in Scotland of which 28 were operational. All the operational sites were inspected during 1999–2000. Over the last three years a total of 254 inspection contacts were recorded at open-cast sites in Scotland by inspectors. These included visits to non-operational sites to check their status.

  HSE has no plans to change this inspection strategy.

  Road Hauliers (Compensation)
  Mr. Bercow
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his answer to the hon. Member for Morecambe and Lunesdale (Miss Smith), of 19 April 2000,Official Report, column 485W, if he will list those areas of sustained effort which required departmental and diplomatic activity in the

  371W
  settlement of claims by road hauliers affected by the 1996 dispute; and what total sums of claims (a) have been agreed and (b) were refused by the French Government. [120847]

  Mr. Hill
  Action included numerous meetings with the French Ministry of Transport and with the Interior Ministry, initially to clarify the scope of the French compensation code, the legal and administrative procedures for submitting claims and the basis on which claims should be prepared. Subsequent meetings dealt with the lack of consistency among Préfectures in the application of the rules; their application in particular circumstances, including in respect of lorries that were blocked in more than one Département and those that were prevented from entering France; the delay in processing claims and the revised arrangements introduced to speed up the process. The trade associations were also represented at some of the meetings.

  Officials also spent a great deal of time giving guidance to claimants and assisting them in lodging claims. However, claimants are under no obligation to inform the Department of the outcome of their cases. We are therefore unable to provide information about amounts of compensation paid and refused.

  Speed Limits
  Mrs. Brinton
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he has to allow the erection of signs in home zone areas instructing drivers to drive at very slow speeds. [120984]

  Mr. Hill
  Local traffic authorities have the powers to introduce 20mph speed limits and associated signing without seeking consent from the Secretary of State. For the pilot home zones in England, we will consider authorising the use of advisory 10mph maximum speed signs. This will depend on the effectiveness of engineering measures or 20mph speed limits in reducing vehicle speeds.

  Croydon Tramlink
  Mr. Ottaway
  To ask the Secretary of State for the Environment, Transport and the Regions when his Department last assessed the level of passenger demand for the Croydon Tramlink. [120841]

  Mr. Hill
  The Department assessed levels of passenger demand for Croydon Tramlink prior to the Concession Agreement being signed in 1996. In line with the PFI nature of the project, assessment of passenger demand for Tramlink is now a matter for the concessionaire Tramtrack Croydon Ltd. (TCL). I understand that in April this year TCL estimated that Croydon Tramlink will carry more than 20 million passengers a year.

  Utility Road Works
  Mr. Webb
  To ask the Secretary of State for the Environment, Transport and the Regions what steps he is taking to encourage utility companies and others to co-ordinate their activities in order to reduce the number of occasions on which roads and pavements are dug up. [121062]

  Mr. Hill
  Street works undertakers are required under the New Roads and Street Works Act 1991 to co-operate with highway authorities and one another to co-ordinate 372W
  their works, in the interests of safety, and in order to minimise inconvenience to road users and protect the street and apparatus in it. This duty of co-ordination is backed by criminal sanctions. Highway authorities for their part must co-ordinate works of all kinds in the streets for which they are responsible. A code of practice issued under the Act sets out the co-ordination machinery in detail.

  Regulations made last year under the 1991 Act aim to facilitate and encourage the electronic transfer of information about street works and other works in the highway between utilities and highway authorities, by way of a system known as ETON which makes use of the internet. This will ensure greater consistency and speed in transferring and registering the information, which in turn will help authorities in their co-ordination role.

  On 5 April, in addition to announcing its intention to develop a scheme to charge utilities for street works which are unreasonably prolonged, the Government also stated that it would work with highway authorities and utilities to develop best practice on street works. Co-ordination and quality of work were specifically mentioned as areas to cover. We aim to publish guidance later this year.

  Bilateral Air Service Agreement
  Miss McIntosh
  To ask the Secretary of State for the Environment, Transport and the Regions (1) what the Government's policy is on granting the European Commission a mandate to negotiate bilateral air service agreement between the EU and the US; [121285]

  (2) if it is his objective to achieve full liberalisation of air services between the UK and the US as a result of the forthcoming bilateral air service agreement talks with the US; [121283]

  (3) what his policy is on open skies in the context of the forthcoming bilateral air talks with the US Government; [121284]

  (4) what recent discussions he has had with his US counterpart on bilateral air service agreement; [121281]

  (5) what HM Government's aims are in the forthcoming bilateral air service agreement talks with the US Government; and if he will make a statement. [121282]

  Mr. Mullin
  It is the Government's policy to secure the liberalisation of the UK/US aviation market, an objective often referred to as 'open skies'. In pursuit of this objective, my right hon. Friend the Deputy Prime Minister has spoken on a number of occasions with the US Secretary for Transportation, and has met him twice this year.

  Our aim in negotiations is to remove all capacity and route restrictions on UK-US traffic, thereby increasing competition to the benefit of consumers, provided UK carriers can gain effective access to the US domestic market and so compete on fair terms.

  As regards a mandate for the EU, our priority continues to be our bilateral negotiations with the US and we are not persuaded of the advantages of granting the Commission a mandate. Nevertheless, we have taken part constructively

  373W
  in discussions with EU colleagues and the Commission on the technical detail of what a possible mandate might contain.

  Forth Rail Bridge
  Mr. Dalyell
  To ask the Secretary of State for the Environment, Transport and the Regions if he will call for reports from Rigblast and Railtrack about the use of blasting techniques on the Forth Rail Bridge. [120866]

  Mr. Hill
  [holding answer 8 May 2000]: I understand that the Scottish Environmental Protection Agency and the Health and Safety Executive are closely monitoring the work currently being undertaken by Railtrack and its contractors.

  Pollution
  Mr. Derek Twigg
  To ask the Secretary of State for the Environment, Transport and the Regions how many incidents have been reported in each of the last five years for which figures are available of(a) deaths and (b) injuries caused by uncontrolled releases of (i) hydrocarbons, (ii) ammonia and (iii) HFCs. [120422]

  Mr. Meacher
  [holding answer 8 May 2000]: In the context of refrigeration systems, the statistical information held by the Health and Safety Executive is not sufficiently detailed to determine whether any reported deaths and injuries have been caused by uncontrolled releases of hydrocarbons, ammonia and HFCs. Hydrocarbons have been interpreted only in the context of refrigeration and not its wider definition which would include substances such as petrol and LPG.

NORTHERN IRELAND

  Public Bodies (Appointments)
  Mr. Barnes
  To ask the Secretary of State for Northern Ireland if he will list the appointments made to public bodies by the first minister and deputy first minister during the period of devolution from November 1999 to February 2000. [120633]

  Mr. Mandelson
  The appointments made to public bodies in Northern Ireland by the First Minister and Deputy First Minister during the period of devolution were as follows:

  Planning Appeals Commission

  Part-time Commissioner—T. McCaw

  NI Economic Council

  Member—Prof. B. K. Ashcroft

  Member—F. P. Bunting

  Member—J. Corey

  Member—T. Gillen

  Member—Ms R. G. D. Johnston

  Member—R. W. J. Tosh.

  Farmers (Early Retirement)
  Mr. McGrady
  To ask the Secretary of State for Northern Ireland if he will introduce an early retirement scheme for farmers; and if he will make a statement. [120736]
  374W
  Mr. Ingram
  As the hon. Member is aware, an early retirement scheme is one of the discretionary measures provided for under the Rural Development Regulation. However, such a scheme would be expensive. It would benefit relatively few people and would have to be paid for by many others. Given the Department of Agriculture and Rural Development's existing budget and current commitments, it is simply not affordable at present. As a result, an early retirement scheme has not been included as one of the measures to be introduced in Northern Ireland in the period 2000–06 under the Rural Development (Accompanying Measures) Plan. However, a scheme has not been entirely ruled out and can be considered in the later years of the Plan period when modulation receipts are at their maximum. It is, however, a very costly option and it would need to be demonstrated that such a scheme would offer value for money.

  Agrimonetary Compensation
  Mr. McGrady
  To ask the Secretary of State for Northern Ireland when agrimonetary compensation will be made available for the arable, beef and sheep sectors in(a) 2000 and (b) 2002; and if he will make a statement. [120755]

  Mr. Ingram
  In terms of optional agrimonetary compensation, payments to the sheep sector will be made with the first advance on ewe premium in July 2000.

  The bulk of payments to the beef sector, i.e. beef special premium and suckler cow premium, will be made from October 2000.

  In terms of compulsory agrimonetary compensation, the second instalment of compensation to beef and arable producers will be paid from October 2000 with the third instalment a year later. The third instalment for sheep is likely to be paid in April 2001.

  No payments are presently planned for 2002.

  Mr. McGrady
  To ask the Secretary of State for Northern Ireland for what reason the Government did not provide the agrimonetary compensation available in 2000 to the(a) beef, (b) sheep and (c) arable sectors; and if he will make a statement. [120756]

  Mr. Ingram
  Compulsory agrimonetary compensation totalling up to £88 million will be payable in 2000 to the UK arable, beef and sheep sectors. The Prime Minister's announcement of 30 March 2000 made available further optional compensation totalling £66 million to the beef, sheep and dairy sectors. This balanced the difficulties faced by the agricultural industry with the impact on the UK Exchequer. Drawing down agrimonetary compensation (which must be paid on a UK-wide basis) has considerable public expenditure implications: once the Fontainbleau rebate is taken into account, the cost of the 30 March agrimonetary package to the UK Exchequer is approximately £50 million. Expenditure of the magnitude involved must be judged carefully against the many competing demands on the public purse.

  Union Flag
  Mr. John D. Taylor
  To ask the Secretary of State for Northern Ireland whether a Union flag has been provided at the Roads Service Maintenance Depot, Ballinahone, Armagh City; who has been made responsible for hoisting
  375W
  the Union flag at these premises on the designated dates; whether St. Patrick's day and Easter day were recognised by the flying of the Union flag at these premises; and if he will make a statement about the arrangements to fly the Union flag at this Depot. [120796]

  Mr. Ingram
  Responsibility for the subject in question has been delegated to the Roads Service under its chief executive, Mr. C. James.

  I have asked him to arrange for a reply to be given.

  Letter from C. James to Mr. John D. Taylor, dated 8 May 2000:
  The Secretary of State for Northern Ireland has asked me to respond to your recently tabled Parliamentary Question about the flying of the Union Flag at the Roads Service Maintenance Depot, Ballinahonemore Road, Armagh.
  I can advise that a Union Flag has been provided at the Depot and that the Premises Officer for the building is responsible for flying the flag on the designated dates. Regrettably, due to an oversight, the flag was not flown on St. Patrick's Day or Easter Day this year. I have, however, reminded relevant staff of the instructions for flags to be flown on designated dates.
  I hope you find this information helpful.

  Public Authorities
  Mr. McGrady
  To ask the Secretary of State for Northern Ireland when he will make an order listing the public authorities to be designated under section 75(3)(a) and (d) of the Northern Ireland Act 1998; what bodies are to be included in the initial order; and what bodies he proposes to consult in relation to the second order. [120702]

  Mr. Mandelson
  The majority of public bodies to which section 75 of the Northern Ireland Act 1998 applies are identified in the legislation. In relation to designation under section 75(3)(a) and (d) of the Act, it is intended to lay before Parliament, as soon as possible, an order which will list a number of bodies in respect of which consultation is complete. In regard to the second order, it is intended to consult a number of additional bodies suggested by the Equality Commission and which carry out functions relating to Northern Ireland.

AGRICULTURE, FISHERIES AND FOOD

  BSE
  Sir Richard Body
  To ask the Minister of Agriculture, Fisheries and Food if he will call for a report on recent research in Switzerland concerning tests capable of detecting sub-clinical infection of BSE. [120652]

  Ms Quin
  A Swiss company, Prionics, has developed a test for the post mortem diagnosis of BSE in cattle, the Prionics Check Test. In a recent evaluation of selected BSE screening diagnostic tests conducted under the auspices of the European Commission, the Prionics Check Test detected all clinically affected animals which were histopathologically positive. Prionics have also published the results of a validation of their test on clinical cattle. Swiss authorities have used the test to survey healthy cattle slaughtered for human consumption, casualty animals also slaughtered for human consumption and fallen stock. They have identified a small number of positive animals, especially among the casualty and fallen stock categories.
  376W
  This test was employed in a survey of British cattle more than five years of age slaughtered under the over-thirty-months scheme. The survey involved the examination of a systematic sample of 4,136 cattle. The Prionics Check Test was not found to be more sensitive than conventional histopathological examination of brain samples. The comparative data obtained by histopathological diagnosis at the Veterinary Laboratories Agency indicate that the Prionics Check Test is capable of detecting BSE-infected animals only three months or less before the onset of clinical signs and, at present, cannot be regarded as being capable of detecting BSE-infected animals at an earlier stage.

  Badger Culling
  Mr. Baker
  To ask the Minister of Agriculture, Fisheries and Food if he will list the(a) number and (b) species of non-target animals which have been caught in cage traps set for badgers in the TB trial cull; if he will indicate (i) the number which were injured but released, (ii) the number which (A) were found dead and (B) needed to be dispatched as a result of their injuries and (iii) the nature of the injuries; and if he will make a statement. [120775]

  Ms Quin
  [holding answer 4 May 2000]: In trial operations to date 373 non-target animals and birds have been captured, of which 336 were released uninjured. For the remainder the information requested is as follows:

  Species

  Number found dead

  Number found injured and despatched

  Nature of injuries

  Grey Squirrel

  5

  10

  caught in mesh bars of trap

  Pheasant

  5

  9

  head injuries

  Rook

  2

  1

  wing/leg damage

  Jay

  1

  3

  wing/leg damage

  Fox

  0

  1

  serious mange

  No injured animals were released.

  Mr. Baker
  To ask the Minister of Agriculture, Fisheries and Food what plans he has for the badger culling trial to observe a closed season; and if he will make a statement. [120776]

  Ms Quin
  [holding answer 4 May 2000]: The badger culling trial incorporates a closed season from 1 February to 30 April inclusive. During this period no trapping or culling takes place.

  Fishing Industry
  Mr. Mitchell
  To ask the Minister of Agriculture, Fisheries and Food when and for what reason he decided to transfer 200 tonnes of plaice and sole to Belgium; and what consultations he held with the industry. [119236]

  Mr. Morley
  A "gentlemen's agreement" has been reached with Belgium, Ireland and the Netherlands—welcomed by the UK industry—on the withdrawal of beam trawlers until 1 May from the northern part of the Irish sea closed to protect spawning cod. In the context of arriving at that agreement, the UK undertook to transfer 190 tonnes of North Sea plaice and 5 tonnes of sole in ICES Areas VIId and VIIfg to the Belgian authorities for them to allocate.
  377W
  This transfer was in recognition of the good will shown by the Belgians, who have substantial flatfish quotas in the Irish sea, in reaching agreement with us and of our on-going co-operation with them in matters of quota management including assistance with quota transfer to ourselves. The transfer was not the subject of prior consultation with the industry but it came from stocks that were underfished in 1999, particularly North sea plaice where the underfish exceeded 10,000 tonnes.

  No British fisherman will suffer a reduction in fishing opportunities as a result of this arrangement. 50 tonnes of North sea sole obtained through economic link license conditions has also been allocated to the inshore sector.

  Bovine TB
  Mr. Baker
  To ask the Minister of Agriculture, Fisheries and Food how many confirmed cases of bovine TB there were in Staffordshire and Derbyshire in(a) 1997, (b) 1998 and (c) 1999; and if he will make a statement. [120778]

  Ms Quin
  [holding answer 4 May 2000]: The number of herds in Staffordshire and Derbyshire where bovine TB has been confirmed were:

  Derbyshire

  Staffordshire

  1997

  1

  24

  1998

  6

  30

  1999

  19

  35

  Mr. Baker
  To ask the Minister of Agriculture, Fisheries and Food how many badger road casualties tested as positive for bovine TB in(a) Staffordshire, (b) Derbyshire, (c) Cheshire, (d) Shropshire and (e) England and Wales in (i) 1997, (ii) 1998 and (iii) 1999. [120772]

  Ms Quin
  [holding answer 4 May 2000]: In the period concerned, badger road casualties were collected at the discretion of Divisional Veterinary Managers. The number of badger road casualties that tested positive for bovine TB were:

  1997

  1998

  1
  1999

  Staffordshire

  6

  8

  6

  Derbyshire

  0

  0

  2

  Cheshire

  0

  0

  0

  Shropshire

  2

  0

  0

  England and Wales

  80

  101

  71

  1 In 1999 carcases were collected only between January and August.

  Fallen Stock
  Mr. Gray
  To ask the Minister of Agriculture, Fisheries and Food, pursuant to the answer of 12 April 2000,Official Report, column 220W, on fallen stock, how many knackermen own approved incinerators for the disposal of specified risk material. [120769]

  Ms Quin
  [holding answer 4 May 2000]: Twenty-six knackers' yards have incinerators which are approved to incinerate specified risk material.

SCOTLAND

  Assisted Areas
  Mr. David Stewart
  To ask the Secretary of State for Scotland how many responses were received by his Department in respect of the revised assisted areas map; and how many responses(a) objected to and (b) supported the removal of Inverness, Nairn, Badenoch, and Strathspey from the proposed map. [120924]

  Dr. Reid
  [holding answer 5 May 2000]: During the consultation period following the 10 April announcement of revised Assisted Area map proposals, a total of 83 responses were received by my Department, of which a total of 63 related to all of or parts of Inverness, Nairn, Badenoch and Strathspey areas.

  Mr. David Stewart
  To ask the Secretary of State for Scotland what the criteria were which excluded Inverness, Nairn, Badenoch and Strathspey from the revised assisted areas map. [120926]

  Dr. Reid
  [holding answer 5 May 2000]: The July 1999 Assisted Area map proposals put forward the Highlands and Islands NUTS 2 area as a whole, for inclusion on the basis of its population sparsity. However, the European Commission would not accept this, and the Inverness NUTS 3 area does not on its own meet the sparsity criterion.

  Mr. David Stewart
  To ask the Secretary of State for Scotland if he will rank Scottish constituencies by(a) the reduction and (b) the increase in population coverage proposed in the revised assisted areas map. [120927]

  Dr. Reid
  [holding answer 5 May 2000]: The information requested is contained in the table (but see note following).

  Scottish parliamentary constituencies with reduced population coverage, comparing the revised Assisted Areas map proposals published in April 2000 against the earlier proposals published in July 1999

  Parliamentary constituency

  Population change

  Pollok

  61,862

  Inverness East, Nairn and Lochaber

  55,451

  Cathcart

  36,536

  Moray

  24,329

  Angus

  22,244

  Carrick, Cumnock and Doon Valley

  19,649

  Ross, Skye and Inverness West

  19,367

  Govan

  8,846

  Clydesdale

  7,991

  Edinburgh West

  7,006

  Roxburgh and Berwickshire

  6,218

  Falkirk West

  6,160

  Edinburgh North and Leith

  6,036

  Dumbarton

  6,015

  Paisley South

  5,800

  Falkirk East

  5,011

  Airdrie and Shotts

  4,734

  Rutherglen

  1,842

  379W

  Scottish parliamentary constituencies with increased population coverage, comparing the revised Assisted Areas map proposals published in April 2000 against the earlier proposals published in July 1999

  Parliamentary constituency

  Population change

  Dundee East

  31,275

  Greenock and Inverclyde

  30,920

  Maryhill

  29,888

  Anniesland

  29,009

  East Kilbride

  23,616

  Galloway and Upper Nithsdale

  20,266

  Livingston

  16,764

  Tweeddale, Ettrick and Launderdale

  14,837

  Dundee West

  14,684

  Kelvin

  9,717

  Paisley North

  5,806

  Coatbridge and Chryston

  5,213

  Hamilton South

  5,051

  Ayr

  4,824

  West Renfrewshire

  4,816

  Clydebank and Milngavie

  4,197

  Dumfries

  2,587

  Eastwood

  602

  Stirling

  236

  Note:

  These figures are based on population data for 1991 wards. Several Parliamentary Constituency and ward boundaries have changed since 1991, therefore a 1991 ward may be shared between more than one parliamentary constituency. Due to this, the above data has been compiled on a 'best fit' basis.

CULTURE, MEDIA AND SPORT

  Millennium Dome
  Mr. Peter Ainsworth
  To ask the Secretary of State for Culture, Media and Sport how many corporate hospitality events have taken place at the dome to date; and how many are planned. [119307]

  Janet Anderson
  [holding answer 17 April 2000]: During the period 1 January to 15 April 2000 there were 456 corporate hospitality events. For the period 16 April to 31 December 2000 there are 105 confirmed events and a further 476 provisional bookings awaiting confirmation.

  Mr. Peter Ainsworth
  To ask the Secretary of State for Culture, Media and Sport how much financial contribution to the New Millennium Experience Company corporate hospitality events at the dome(a) have made to date and (b) are expected to make. [119308]

  Janet Anderson
  [holding answer 17 April 2000]: To date corporate hospitality events have represented 17 per cent. of total catering sales. Corporate hospitality events are expected to represent approximately 20 per cent. of all catering sales.

  Forth Rail Bridge
  Mr. Dalyell
  To ask the Secretary of State for Culture, Media and Sport what action he has taken since June 1999 to promote the inclusion of the Forth Rail Bridge as a UNESCO World Heritage Site; what progress has been made with preparing a management plan as required by UNESCO for such sites; and if he will make a statement. [120865]
  380W
  Mr. Alan Howarth
  [holding answer 8 May 2000]: Responsibility for nominating the Forth Bridge to UNESCO for World Heritage (WH) Site status, including arrangements for producing a Management Plan, lies with the Scottish Executive. The Forth Rail Bridge is one of 25 sites included in the UK's Tentative List of sites which may be nominated to UNESCO for WH Site status over the next 10 years. My Department is liaising with the Devolved Administrations and other interested bodies over the order and timing of future nominations, taking into account the UNESCO World Heritage Committee's priorities for action.

SOCIAL SECURITY

  Back to Work Bonus
  Mr. Matthew Taylor
  To ask the Secretary of State for Social Security what assessment he has made of the effectiveness of the back to work bonus; and if he will make a statement. [120802]

  Angela Eagle
  An evaluation of the back to work bonus has recently been completed, with the publication in April of the final report "Prospects of Part-Time Work: the Impact of the Back to Work Bonus". A copy has been placed in the Library.

  We will ensure that the back to work bonus continues to complement other measures that provide cash help for people moving from benefits to work.

  Job Seeker's Allowance
  Mr. Matthew Taylor
  To ask the Secretary of State for Social Security what(a) proportion and (b) number of people who claimed job seeker's allowance in 1999 declared part-time work; what their average earnings were (i) per hour and (ii) per week; and if he will make a statement. [120801]

  Angela Eagle
  The information is not available in the format requested. Such information as is available is in the table.

  Job Seeker's allowance (income-based) claimants with part-time earnings, February to November 1999

  Number

  Number of claimants

  33,000

  Average weekly part-time earnings

  £28.31

  Percentage of total JSA(IB) claimants

  3.6

  Notes:

  1. Figures are based on a four-quarterly average of point in time surveys throughout 1999.

  2. Claimant figure has been rounded to the nearest thousand.

  3. Sample size 5 per cent., therefore subject to sampling error.

  4. No account is taken of any partner's earnings.

  5. Numbers represent income-based JSA cases where either an amount is taken into account or disregarded from their benefit. It will not therefore include claimants who declare work but receive no remuneration.

  6. Information about the hourly level of average earnings is not available.

  Source:

  Jobseeker's Allowance Statistics Quarterly Inquiries, February to November 1999.

  Stakeholder Pensions
  Dr. Cable
  To ask the Secretary of State for Social Security what estimate the Government have made of the impact of demutualisation of life insurers and private pension providers on the provision of stakeholder pensions. [121031]

  Mr. Rooker
  It is expected that both mutual and shareholder owned providers will be offering stakeholder pensions from April 2001. Both will operate under the same rules. There is no indication that demutualisation will have an impact on the provision of stakeholder pensions.

  Family Support
  Mr. Gerald Howarth
  To ask the Secretary of State for Social Security what initiatives have been introduced since 1 May 1997 to support the family, with particular reference to cases in which there are children at risk. [120674]

  Angela Eagle
  We are committed to giving children the best possible start. Measures announced so far in this Parliament will help lift 1.2 million children out of poverty, and are a major step in achieving our commitment to eradicating child poverty. Measures since 1 May 1997 include:Child Benefit (CHB)—36 per cent. increase in rate for eldest child. Further above-inflation rise April 2000: standard rate CHB £15 for eldest child, £10 for other children.
  Income-related benefits—child allowance for under-11s up by £4.70 from last October. New allowance for children aged 0-16 now £26.60. Support for children under 11 in the income-related benefits up by over 50 per cent. in two years.
  Sure Start Maternity Grant—April 2000: payments double from £100 to £200, and to £300 from this autumn.
  Working Families Tax Credit (WFTC)—extra help for low-income working families. Includes new allowance for disabled children, extra £21.90 on top of other child allowances, and from June, a £4.35 increase in under-16 child credit (Income Support/Jobseeker's Allowance/Housing Benefits child allowance increase from October).
  Childcare Tax Credit—part of WFTC, 70 per cent. of eligible child care costs up to a maximum of £100 for one child, £150 for two or more.
  Children's Tax Credit—April 2001, new Tax Credit, worth up to £442 a year.
  Integrated Child Credit—from 2003, will bring together different strands of help for children currently contained in benefits and tax system.

  In all, we will provide an additional £7 billion a year in new tax and benefit measures for families with children by the end of this Parliament. By April 2001, as a result of budget changes to personal tax and benefits, families with children will be, on average, £850 a year better off.

  Later this year we will be publishing our second annual report on tackling poverty and social exclusion, monitoring progress so far.

  Winter Fuel Payments
  Mr. Willetts
  To ask the Secretary of State for Social Security how many people aged 60 years and above are ineligible for the winter fuel payments because they(a) are in (i) residential care, (ii) nursing homes and (iii) local authority residential accommodation, (b) live abroad, (c) are in prison and (d) are in hospital. [120384]
  382W
  Angela Eagle
  Winter Fuel Payments are provided to older people who are ordinarily resident in Great Britain to help towards their winter heating costs. Where someone is already receiving public assistance with their heating costs it is inappropriate for a Winter Fuel Payment to be made. For example, payments are inappropriate for people living permanently in residential care or nursing homes who also receive help through Income Support or income-based Jobseeker's Allowance. It is also inappropriate for Winter Fuel Payments be made to people who do not contribute towards their heating costs, such as those serving a prison sentence or those who have been receiving free hospital in-patient treatment.

  The estimated number of people aged 60 or over who were receiving public assistance during the winter of 1999 are set out by category:

  Number

  Residential care homes

  199,000

  Nursing homes

  20,000

  Local Authority residential accommodation

  6,000

  Sentenced prisoners

  900

  Hospital in-patients

  12,000

  Note:

  Numbers are rounded to the nearest thousand.

  All estimates are for November 1999 except the estimate for hospital in-patients which is for March 1999. It is not possible to estimate the number of people aged 60 or over who are ineligible for a Winter Fuel Payment because they live abroad, as we do not hold records for those among them who do not receive a social security benefit.

  Family Benefits
  Mr. Willetts
  To ask the Secretary of State for Social Security how many families have been in receipt of(a) family credit and (b) the working families tax credit in each month since May 1997. [121035]

  Angela Eagle
  Family Credit was replaced with Working Families Tax Credit (WFTC) from 5 October 1999.

  The information is in the table.

  Numbers of families in receipt of family credit and WFTC, for each month from May 1997

  Thousand

  Month

  Family credit

  WFTC

  Total

  May 1997

  748

  —

  748

  June 1997

  760

  —

  760

  July 1997

  764

  —

  764

  August 1997

  758

  —

  758

  September 1997

  761

  —

  761

  October 1997

  763

  —

  763

  November 1997

  766

  —

  766

  December 1997

  751

  —

  751

  January 1998

  754

  —

  754

  February 1998

  761

  —

  761

  March 1998

  767

  —

  767

  April 1998

  767

  —

  767

  May 1998

  767

  —

  767

  June 1998

  785

  —

  785

  July 1998

  786

  —

  786

  August 1998

  783

  —

  783

  September 1998

  785

  —

  785

  October 1998

  786

  —

  786

  November 1998

  791

  —

  791

  383W

  Numbers of families in receipt of family credit and WFTC, for each month from May 1997

  Thousand

  Month

  Family credit

  WFTC

  Total

  December 1998

  780

  —

  780

  January 1999

  780

  —

  780

  February 1999

  789

  —

  789

  March 1999

  792

  —

  792

  April 1999

  793

  —

  793

  May 1999

  791

  —

  791

  June 1999

  801

  —

  801

  July 1999

  797

  —

  797

  August 1999

  784

  —

  784

  September 1999

  758

  —

  758

  October 1999

  625

  253

  878

  November 1999

  464

  467

  931

  December 1999

  365

  567

  932

  January 2000

  249

  703

  952

  February 2000

  109

  877

  986

  March 2000

  —

  994

  994

  Notes:

  1. These figures, and in particular the WFTC figure for March. exclude awards made after March and backdated.

  2. Figures are for Great Britain only.

  3. Sample size 5 per cent., therefore subject to sampling error.

  4. Figures have been rounded to the nearest thousand.

  Source:

  Family Credit/Working Families Tax Credit 5 per cent. sample of awards.

WALES

  Elected Mayors
  Mr. Evans
  To ask the Secretary of State for Wales what recent discussions he has had with the Local Government Association with regard to the introduction of elected mayors in Wales. [115583]
  384W
  Mr. Hanson
  I have discussed this and other issues relating to the Local Government Bill in a series of meetings with the Welsh Local Government Association over the last few months.

  Mr. Evans
  To ask the Secretary of State for Wales what plans he has for the remuneration of elected mayors in Wales. [115581]

  Mr. Paul Murphy
  The level of remuneration of elected mayors will be for their own local authorities to determine. The National Assembly for Wales and the Welsh Local Government Association are in the process of setting up a review of special responsibility allowances, which will recommend appropriate levels of allowances for senior councillors, including elected mayors. It is intended that the result of the review will be published before the summer.

  Local Government
  Mr. Barry Jones
  To ask the Secretary of State for Wales what recent discussions he has had with the First Secretary concerning the efficacy of the cabinet system in the management of local government in Wales; and if he will make a statement. [118187]

  Mr. Hanson
  I am in regular contact with the Assembly Secretary for Local Government, Peter Law, over the provisions of the Local Government Bill which include provision for new executive structures for councils. The Government are committed to the modernisation of local government in England and Wales, and the new executive structures are vital to the overall aims of transparency, efficiency and accountability.

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Bath and Wells.

Baroness Billingham
Angela Theodora Billingham, having been created Baroness Billingham, of Banbury in the County of Oxfordshire, for life—Was, in her robes, introduced between the Baroness Crawley and the Lord Bach.
Lord Turnberg
Sir Leslie Arnold Turnberg, Knight, having been created Baron Turnberg, of Cheadle in the County of Cheshire, for life—Was, in his robes, introduced between the Lord Walton of Detchant and the Lord Winston.

House of Lords and Devolution
2.49 p.m.
Lord Dixon-Smithasked the Leader of the House:
Whether the House can exercise its responsibility towards the whole of the United Kingdom if it is unable to discuss matters for which responsibility is shared between the United Kingdom and a devolved body.
The Lord Privy Seal (Baroness Jay of Paddington): My Lords, the simple answer, which might not meet the complexity of the noble Lord's concerns, is that it is for this House to decide what it wishes to discuss, but Ministers can answer only on those matters for which they are responsible. This will include matters where responsibility is shared with one or other of the devolved administrations, but not where responsibility is wholly devolved.
Lord Dixon-Smith: My Lords, I am grateful to the noble Baroness the Lord Privy Seal for that Answer. It helps us forward to some degree. The arrangements under which the devolved bodies were established are such that the finance for them comes almost exclusively from this Parliament. Does the noble Baroness agree that in those circumstances and where matters of relative performance are under examination, it is necessary that her colleagues as Ministers give clear answers to questions about where decisions are taken on such issues?
If we do not know for certain that a particular situation arises as a result of a decision taken by a devolved body, given that the availability of funding controls everything, people of a suspicious nature such
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as myself might be inclined to the view that the fault lies within this building. If that were unjust, that would be an unfortunate situation for us all.
Baroness Jay of Paddington: My Lords, perhaps I may draw the attention of the noble Lord and the House to a helpful note recently produced by the Cabinet Office, Devolution Guidance Note 13, on the handling of parliamentary business in the House of Lords. It is publicly available and published on the Internet. The document is succinct and clear, but it is more than eight pages long so I shall not attempt to précis it in response to the Question.
It contains a number of hypothetical examples, one of which precisely addresses the point raised by the noble Lord. Example 1 in paragraph 3.6 is a question asked about the comparative performance in school examination results throughout the United Kingdom. A clear response is given. It is that although the matter is fully devolved as regards, for example, Scotland, and although the DfEE may have access to the information, the question is one for the national Parliament in Scotland.
Perhaps I may detain the House in order to repeat the hypothetical question and answer. The suggested appropriate answer is:
"The Government expect to publish results for England in [month A]. The publication of school examination results for Wales & Scotland is a matter for the National Assembly and the Scottish Executive respectively. Results for 1998 for the whole of Great Britain are available in the Library in the name of the publication".
I believe that that precisely answers the point which the noble Lord made about comparative information.
Lord Elton: My Lords, is it not a matter of surprise that guidance as to what Parliament may inquire into originates from outside Parliament and the Cabinet Office and not from the resources of Parliament itself?
Baroness Jay of Paddington: My Lords, I believe that the Cabinet Office is trying to give expression to the legislation on devolution and, indeed, to the guidance which has been agreed and discussed in the Houses of Parliament along the lines that I have described. As I said, it is intended purely as an extremely helpful and practical guide to the ways in which legislation passed by this House and another place should be put into practice.
Lord Lang of Monkton: My Lords, may I ask the noble Baroness to revise her initial Answer? Surely our constitutional arrangements do not exist for the convenience of government Ministers. If neither House of this United Kingdom Parliament can debate issues which affect the United Kingdom in the round and its constituent parts, does that not create a democratic deficit?
Baroness Jay of Paddington: My Lords, I believe that the noble Lord must have misheard what I said in my initial response. I said that, indeed, it was for this

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House to decide what it wished to debate. Ministers can be accountable for and report responsibly to this House only on matters for which they are responsible.
Lord Roberts of Conwy: My Lords, perhaps I may draw the attention of the noble Baroness to a statement contained in the Memorandum of Understanding issued last year by the noble and learned Lord the Lord Chancellor. It states that:
"The [United Kingdom] Parliament retains the absolute right to debate, inquire into or make representations about devolved matters".
If that is so, should Ministers not fully respond to such debates and inquiries about devolved matters rather than seek to brush them under the carpet?
Baroness Jay of Paddington: My Lords, I do not believe that anything that I said in response to the previous questions could possibly be described as an attempt to brush matters under the carpet. Again, perhaps I may refer to the very useful document which I mentioned previously. As I said in answer to the previous supplementary, the Cabinet Office guidance tries to give practical expression to the legislation. I believe that if the noble Lord looks, for example, at example 7 in that document, he will see that it is indeed legitimate for this House to have a Wednesday debate on a subject which would be regarded as being devolved. That is perfectly legitimate and obviously within the rules of procedure of this House. The question is: what degree of responsibility would be had by the Minister who responded to the debate for the specific policy areas which arose?
Lord Avebury: My Lords, perhaps I may make what I believe is a helpful suggestion. The example given by the noble Baroness related to comparative figures between England and Scotland. Those figures were available in tabulated form prior to 1998 but had to be obtained separately from then onwards because it became the responsibility of the Scottish Parliament. Would it not be possible for those who design the web pages of the Scottish Parliament and, say, the DfEE to put hot links between the two so that if people wanted to compare the figures between England and Scotland or, for that matter, between England and Wales, they could do so very easily on the web?
Baroness Jay of Paddington: My Lords, my common sense reaction to the noble Lord's question is that, indeed, he makes a sensible point. However, at least part of such a decision would have to be made by the Scottish Executive.
Lord Stoddart of Swindon: My Lords, is it possible for Select Committees of the House of Commons or this House to summon Ministers from the Scottish Parliament, the Welsh Assembly or the Irish Assembly?
Baroness Jay of Paddington: My Lords, that question would have to be discussed by a joint
1364
ministerial committee. I believe that it is more likely that in the instances where a Select Committee wanted to examine a devolved matter the relevant Secretary of State would be asked to appear. However, he would be unable to say anything which acknowledged executive responsibility for those matters.
Lord Clark of Kempston: My Lords, can the noble Baroness say whether the Government have any views as to the interpretation of the West Lothian question?
Baroness Jay of Paddington: My Lords, we have discussed the West Lothian question in this House on many occasions, and I am sure that we could continue to do so. As I understand it, the West Lothian question relates to the concerns of Members of Parliament for English constituencies about their continuing involvement in Scottish affairs. I believe that the simple answer is that, where 80 per cent of Members of another place represent English constituencies, it is unlikely that their views and their opinions will be steamrollered.

Act of Union: Bicentenary
2.57 p.m.
Lord Lairdasked Her Majesty's Government:
Whether they will reconsider their decision not to mark the bicentenary in 2001 of the creation of the United Kingdom.
The Minister of State, Cabinet Office (Lord Falconer of Thoroton): My Lords, although we have no plans at present for a formal commemoration of the 200th anniversary of the 1801 Act of Union between Great Britain and Ireland, we recognise the historic significance of that Act to the United Kingdom and, indeed, to the Republic of Ireland. Undoubtedly, we shall want to make reference to it during the course of next year. If there are proposals to mark the anniversary, we shall be interested to hear about them and shall consider whether it is appropriate to support them in any way.
Lord Laird: My Lords, I thank the Minister for his reply. However, does he not understand that there is a considerable amount of unease throughout the country about the Government's failure to mark in a significant way the 200th anniversary of the creation of the United Kingdom? Does he not believe that the contribution that the United Kingdom has made to world civilisation in the form of the industrial revolution, in the defence of freedom, culture and sport, and in passing on democratic values is worth

1365
celebrating specially? Will he at least confirm that the Government have no plans to spend the year 2001 apologising for the creation of the United Kingdom?
Lord Falconer of Thoroton: My Lords, I can certainly confirm that. I can also make it absolutely clear that we are as proud of the distinguished history and traditions of this country as is the noble Lord.
Lord Mackay of Ardbrecknish: My Lords, if the Government are so reluctant to celebrate the 200th anniversary of the creation of the United Kingdom of Great Britain and Ireland, will they show the same reluctance about joining with us in 2007 to celebrate the creation of the United Kingdom, England and Scotland? Or, thanks to the devolution policies, do they believe that we shall still have a United Kingdom, given that the SNP is beating the Labour Party in the opinion polls?
Lord Falconer of Thoroton: My Lords, I am glad to notice that the noble Lord believes that we shall still be the Government in 2007. Of course, I believe that there will be a United Kingdom in the year 2007. That has been made all the more certain by the devolution plans that we have introduced. Perhaps I can reiterate that we are as proud of the distinguished history and traditions of the Union as is everyone else in the House.

The Welfare State and the Elderly
3 p.m.
Earl Attleeasked Her Majesty's Government:
Whether the operation of the welfare state in respect of the elderly is satisfactory.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, the measures:flowing from the Green Paper Partnership in Pensions, together with those announced in the past two Budgets, demonstrate the priority that the Government have given to ensuring a decent income in retirement and improved quality of life for pensioners; hence our proposals for an earnings-linked minimum income guarantee for poorer pensioners now as well as for a state second pension and a stakeholder pension to reduce pensioner poverty in future. The winter fuel payment, worth £3 a week, as well as the minimum tax guarantee and the provision of TV licences will benefit most eligible pensioners.
Earl Attlee: My Lords, I thank the Minister for that reply. As I had a word with her private office, she will be aware that I am straying slightly from my usual topic. At a time when we are spending over £100,000 million on social security, can the Minister explain why increasingly I meet beggars who are clearly too
1366
old to work and who have obviously spent most of their time in the UK? Is the problem one of social security, of law and order, or of health?
Baroness Hollis of Heigham: My Lords, I am grateful that the noble Earl told me that he would ask about beggars. However, I do not believe that that has allowed me to acquire any useful further information to share with the House. We have no statistics about the number of beggars who are elderly—presumably elderly women—for example, over 75. From my experience, beggars are usually younger people who have come to London to try their luck. Certainly any elderly person—someone over 65 or over 75—would be entitled to state benefits, including a state pension. They would be entitled to a minimum income guarantee if they did not have alternative means and they would be entitled to housing benefit.
Given that, the problem ought not to be a social security one. If they are elderly and on the streets, or in some sense sleeping rough, there may be mental health problems or substance abuse problems; certainly there are social exclusion problems.
Lord Clement-Jones: My Lords, if the Minister has had an opportunity to read the recent survey into accident and emergency departments, carried out by the Association of Community Health Councils for England and Wales and the Royal College of Nursing, she will have seen that there are horrendous examples of age discrimination against the elderly. Is it not time, as we urged on the Health Act last year, that there should be an outlawing of age discrimination in the public services?
Baroness Hollis of Heigham: My Lords, I agree with the noble Lord. The Government are entirely and utterly opposed to any discrimination against older people in the National Health Service. Any treatment of elderly people must be done on clinical grounds only, and on no other grounds at all. That is precisely why the Government and my noble friend Lord Hunt of Kings Heath are developing a National Service Framework for Older People. That is being developed this year to ensure consistent quality and decent care for older people across all health authorities.
Baroness Wilkins: My Lords, can the Minister give an assurance that the Government will follow the recommendation of the Royal Commission on Long-Term Care of the Elderly that personal care should be free of charge to those who need it? Do they recognise that personal assistance should be regarded as a fundamental human right? People who can no longer get out of bed, feed or dress themselves without personal assistance or support are not in that position from choice. That service is as essential as the National Health Service, education and others.
Baroness Hollis of Heigham: My Lords, I am batting slightly off my wicket, but I shall have a go. The noble Baroness will know that the Government are considering the Sutherland report, but have not yet

1367
come to a decision as to which path they will take in terms of the recommendations. They have not decided whether to follow a majority recommendation or a minority recommendation, associated with my noble friend Lord Lipsey. He made the point that, given that one is dealing with scarce resources, a real decision has to be made as to whether the cost to people of the existing service is reduced or whether that money is used to improve existing services. The Government are reflecting on that and will make a judgment in due course.
Lord Goodhart: My Lords, will the Government consider giving particular assistance to older pensioners by providing age additions to the basic state pension of a substantial amount for those aged 75, 80 and over?
Baroness Hollis of Heigham: My Lords, I accept the diagnosis of the noble Lord of who are the poorer pensioners. They tend to be the older pensioners—those over 75 or over 80—and often they are single women. The interesting proposals put forward by the Liberal Democrats, and particularly by the noble Lord's right honourable friend Steven Webb, are for a 75 per cent increase between the figures of the basic state pension and the minimum income guarantee. However, I have difficulty with the fact that he proposes that it should be funded by the removal, or the scrapping, of our proposals for the state second pension. That would mean that it would be to the disadvantage of women, carers and disabled people. Another problem is that under the Liberal Democrats' proposals, more people in 2010 would be on income-related benefits rather than fewer.
Baroness Masham of Ilton: My Lords, does the Minister believe that there are enough physiotherapists, occupational therapists and speech therapists to rehabilitate elderly people when they become ill so that they can return home, enjoy their pensions and live an independent life?
Baroness Hollis of Heigham: My Lords, perhaps I could beg the noble Earl, Lord Attlee, the next time he asks this question to go for a UQ rather than a Starred Question! I am assured by my noble friend Lord Hunt—for whose advice I am grateful—that we have a national working scheme looking at precisely those proposals. We recognise how dependent elderly people are, particularly for mobility, on physiotherapy and occupational therapy.
Lord Ashley of Stoke: My Lords, is my noble friend aware that she bats off her wicket very well indeed? I ask her to continue to do so now. Does she agree that there should be an inquiry into the allegations that some hospital trusts use "Not for resuscitation" notices in relation to elderly people without their consent and without consultation with their relatives? If she disagrees with that, I hope that she will consult her colleague. Does she agree that a step forward
1368
would be for the Government to demand from every hospital trust a report on how many "Not for resuscitation" notices are issued, so that those trusts with an abnormally high number can easily be identified?
Baroness Hollis of Heigham: My Lords, that is an interesting question which has been heard by my noble friend Lord Hunt and on which he will want to reflect. Perhaps I may emphasise a response I gave earlier: the Government absolutely deplore "Do not resuscitate" notices in the spirit in which the noble Lord has enunciated. That is a matter for clinical judgment within the framework of careful guidelines drawn up by the Department of Health and the BMA. It is precisely to overcome some of the apparent—I was going to say "discrepancies" but that is a cold word—different responses of hospitals to similar situations that the DoH is developing its National Service Framework for Older People to ensure consistency, decency and quality for all elderly people at a most vulnerable time—when they are in hospital.
Lord HigginsMy Lords, as the Question specifically refers to the operation of the welfare state, is it not the case that there have been considerable problems as a result of break-downs and deficiencies in computer systems, for example, in the payment of deferred pensions? Can the Minister bring us up to date on that? On the point raised by my noble friend Lord Attlee, is there not a case for carrying out a survey on the particular problem to which he has drawn the attention of the House?
Baroness Hollis of Heigham: My Lords, on the second question, I shall certainly ask my colleague in the DETR whether he can give further information on the number of women beggars. I shall write to the noble Earl, Lord Attlee, and put a copy in the Library, when we have further information.
The noble Lord, Lord Higgins, also asked about computers, particularly the NIRS2 computer. The latest information that I have on contributory benefits, as opposed to income-related benefits, is that something like 95 per cent of all benefits have now been paid and that the backlog, if it has not already been cleared, will be cleared by the end of this month. Where appropriate, compensation has been paid.
Baroness Greengross: My Lords, perhaps I may put two points.
Noble Lords: Questions!
Baroness Greengross: My Lords, I apologise. I should like to put two questions to the Minister. First, as regards homeless people and beggars, research published a while ago showed that a high proportion of elderly people are homeless in and around London. Does the Minister agree that we should set up an investigation into the current situation? Secondly, as regards "Do not resuscitate" orders, that is one example of discrimination in the NHS and I am

1369
grateful for the Minister's comment that this will not be tolerated. However, in this area also we do not know all the facts. Does the Minister further agree that it would be better to hold an inquiry to examine all aspects of discrimination in the NHS so that we can eliminate it on the basis of full information?
Baroness Hollis of Heigham: My Lords, noble Lords, including my noble friend Lord Hunt, have heard the points made by the noble Baroness. Obviously my noble friend will reflect on whether it makes good sense to conduct an inquiry. However, what is needed is to ensure that this does not continue to take place in the future. The best way of ensuring that is to establish a National Service Framework for Older People. That is being developed and will apply to all local authorities. I hope that, in a year or two, the noble Baroness—who has worked so wonderfully for Age Concern—will no longer consider this to be a problem.
Baroness Gardner of Parkes: My ]Lords, in the light of so many questions on health being raised today, can the Minister say whether they typify the problem of lack of cohesion between the social services and health sectors? When does she think that this gap in communication will be bridged?
Baroness Hollis of Heigham: My Lords, as my noble friend said, I do not believe that this is so much a matter of lack of joined-up government as a lack of joined-up Questions. In all seriousness, I recognise that the major concerns affecting the elderly, which range from pensions, health, housing, fuel poverty, social exclusion and so forth, need to be addressed by all government departments. That is precisely why the Prime Minister has set up an inter-ministerial group on ageing and the care of the elderly. That group will range across all the fronts of government. Furthermore, that is why my right honourable friend the Secretary of State for Social Security has become the champion of older people in that respect.

Professions Supplementary to Medicine
3.13 p.m.
Lord Clement-Jonesasked Her Majesty's Government:
What prior consultations were carried out in relation to circular HSC 2000/006 Professions supplementary to medicine: employment of practitioners in the NHS and social services departments, issued on 13th March, particularly in relation to "Acquired Rights".
The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, this circular was subject to consultation, in draft, with the professional bodies representing the nine professions then regulated by the Council for Professions Supplementary to Medicine (CPSM) and
1370
with NHS trusts, health authorities, the NHS Confederation, local authorities and social services directors.
Lord Clement-Jones: My Lords, I thank the Minister for that reply. However, it is quite clear that this circular was imposed on the professions involved rather than being the subject of consultation. All the organisations related to the professions allied to medicine are unanimously of the view that these arrangements and methods of dealing properly with non-fully qualified professionals will have an adverse effect on the quality of NHS treatment and also bode extremely badly for the way in which the new health professional council will be set up. Can the Minister give an assurance that arrangements related to the entry of non-qualified professionals for the other professions allied to medicine will be dealt with in a different manner? Furthermore, will there be proper consultation in the future?
Lord Hunt of Kings Heath: My Lords, this is a matter of regulation and it is entirely appropriate that the CPSM forwarded to the Government comments as regards acquired rights, which we have taken forward. It is of course for the CPSM itself to engage in discussions with its constituent boards as to how this is to be taken forward. However, I can assure the noble Lord, Lord Clement-Jones, and all noble Lords that in terms of acquired rights, this would apply to a relatively small number of people. Agreement would be given only after a rigorous process in which the individual board concerned with the individual profession will have a say.
Lord Peyton of Yeovil: My Lords, I must apologise because I have not read every word of the circular referred to in the Question. However, I am curious about the phrase, "professions supplementary to medicine". Does that phrase embrace accountants, who nowadays seem far to outnumber the medical profession, whose business it is to make people feel better? No accountant has ever done anything of that kind.
Lord Hunt of Kings Heath: My Lords, that is an extraordinarily interesting reflection. Sadly, the number of professions that can be regulated under the heading "professions supplementary to medicine" is 12. We have now reached that figure and so I am afraid that there is no room for accountants.
Earl Howe: My Lords, if it is the Government's aim to improve public protection, how can it be right to create a new regulatory body in which the majority of members will have no relevant qualifications and no first-hand knowledge of the professions in question but whose function it will be to decide whether a particular individual is fit to practise? How can that possibly be appropriate?
Lord Hunt of Kings Heath: My Lords, the new health professions council, which is to be established,

1371
will ensure that the public interest is brought to the fore. That is why we wish to increase the number of lay persons on the council. They will help to give strategic direction, to protect the public and to ensure that the interests of the public are given primary concern. However, I can assure the noble Earl that, as regards specific issues relating to specific professions and also to disciplinary procedures, there will be opportunities for those individual professions to be involved and consulted. At the end of the day, the new health professions council will work well with a strong, public lay involvement along with the stewardship of the relevant professions.
Baroness Gardner of Parkes: My Lords, is the Minister aware that acquired rights applied in dentistry in 1921? Anyone who had been practising as a dentist could be registered. However, it was never accepted that those who were registered as a result of acquired rights had the same skills. The circular states that there are two ways in which such rights can be acquired: first, by "grandfathering"—which means that a practitioner has been in the field for long enough; and, secondly, by acquired rights applied to employees who possess neither qualifications nor the relevant education, training and experience. As the noble Lord, Lord Clement-Jones, said, it appears that many of these people will not be adequately qualified. Does the Minister accept that there is a danger here and can he assure the House that something will be done to check on this?
Lord Hunt of Kings Heath: My Lords, the noble Baroness is right to refer to the specific classification on the use of acquired rights which will apply to practitioners who do not qualify for automatic registration but are none the less regarded as practising safely as prosthetists, orthotists or arts therapists, but not necessarily—as the noble Baroness inferred—across the full range of the practice of their particular profession. Each case will be considered on an individual basis. The board, as well as the CPSM, will have to give its approval. I can assure the noble Baroness that I suspect that there will be very few cases indeed where any problems occur. Finally, the public interest will be paramount in any decision taken.
Baroness Masham of Ilton: My Lords, does the Minister believe that complicated professions such as psychotherapy should be regulated? Their practitioners have to deal with extremely difficult problems and there could be cowboys in those fields.
Lord Hunt of Kings Heath: My Lords, I know that concerns have been expressed as to whether counselling professions in general should be regulated. The health professions council, along with provisions in the Health Act 1999, allow us to extend regulation. We have no specific plans to extend regulation in the
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way suggested, but we are talking to stakeholders in that field. We shall consider the matter further in the light of those discussions.
Lord Walton of Detchant: My Lords, does the Minister accept that, while professional self-regulation has been criticised in several quarters over the past few months, and while full lay representation on the new council is entirely right and appropriate, it would be extraordinary if qualified members of each of the 12 professions to be regulated were not to serve on the council so that they could present the professional view?
Lord Hunt of Kings Heath: My Lords, I pay tribute to the noble Lord for the contribution he has made over many years to self-regulation, in particular within the General Medical Council. I can assure the noble Lord that there will be one qualified person from each of the professions serving on the new health professions council. However, I believe it is right to balance that by increasing the number of lay representatives. Self-regulation works, but it is vitally important that there is a strong element in place to represent the public interest. In that way, the public will have confidence in what the regulatory organisation does when acting on its behalf.

Business
3.19 p.m.
Lord Carter: My Lords, at a convenient moment after 3.30 p.m. my noble friend Lord McIntosh will repeat a Statement on Rover which is being made in another place.

Horserace Totalisator Board Bill [H.L.]
Viscount Astor: My Lords, I beg to introduce a Bill to make provision for the transfer of the properties, rights and liabilities of the Horserace Totalisator Board to the Secretary of State, and to make provision for the Secretary of State to dispose of those properties, rights and liabilities. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Viscount Astor.)
On Question, Bill read a first time, and to be printed.

Carers and Disabled Children Bill
Brought from the Commons; read a first time, and to be printed.
Regulation of Investigatory Powers Bill
Brought from the Commons; read a first time, and to be printed.

Business of the House: Debate, 10th May
Baroness Jay of Paddington: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Peston set down for tomorrow shall be limited to five hours.—(Baroness Jay of Paddington.)
On Question, Motion agreed to.

Financial Services and Markets Bill
3.21 p.m.
Lord McIntosh of Haringey: My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.
Clause 131 [Legal assistance scheme]:
Lord Saatchimoved Amendment No. 149A:
Page 63, line 16, leave out ("under section 123(4)").
The noble Lord said: My Lords, my noble friend Lord Kingsland will address this group of amendments. In the meantime, with your Lordships' leave and having given notice to the Minister, I should like to ask the Minister for clarification of a significant development which has occurred since the last Report day of this Bill in your Lordships' House.
Do any noble Lords who participated in our many days of debate on this Bill share my uneasy feeling that since we last met the ground has been shifting under our feet? I refer to the merger of the London Stock Exchange with the Frankfurt Stock Exchange. That appears to raise many questions in relation to this Bill and I shall be grateful for the Minister's response to them.
As a consequence of amendments introduced by the Government in your Lordships' House, the FSA is now the responsible listing authority for the London Stock Exchange and the relevant order affecting that has already been passed in both Houses of Parliament. In the light of that, can the Minister set our minds at rest on some of the issues?
Why does the chairman of the Swedish Stock Exchange say that this merger has political undertones? If that is true, is that an appropriate role for an independent regulatory authority to play? Why does the National Association of Pension Funds say that it could lead to a mismatch of pension fund assets and liabilities? Is it true that all technology companies will in future be quoted in euros in Frankfurt? Who will be the competent listing authority for those companies? Was this merger envisaged by those who designed this Bill? What amendments to the Bill will be required at 'Third Reading to reflect the merger? Will the merged exchange be a recognised investment exchange under Part XVIII of the Bill? How will the FSA discharge its supervisory role of the merged
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exchange? What assurance do we have that the FSA will not itself be merged with the German regulator or with a new European super-regulator without coming back to Parliament first?
I hope the Minister can give us a response to some of those questions at the end of the debate on the amendments. I beg to move.
Lord Elton: My Lords, I do not know what the procedure is under these circumstances, which might have taken place before we resolved to discuss the Report stage at all. But as we are on the question of the parameters within which we are working, I am only just taking on board the significance of what my noble friend said. It seems to me that there are parts of this Bill which may need to be recommitted and that we ought to be looking at the timetable for the whole Bill and not merely for today.
Lord Northbrook: My Lords, I rise to support my noble friend Lord Saatchi. Perhaps the Minister can tell us whether the merger of the London and Frankfurt Stock Exchanges contradicts the provisions of Clause 2, subsections (3)(e) and (3)(g), which state:
"In discharging its general functions the Authority must have regard to … the international character of financial services and markets and the desirability of maintaining the competitive position of the United Kingdom [and) … the desirability of facilitating competition between those who are subject to any form of regulation by the Authority".
Lord Boardman: My Lords, I share the concern expressed by my noble friend. The Stock Exchange is central to this Bill. The changes recently announced and the introduction of Frankfurt throw fresh light on large parts of the Bill. I wait to hear what the Minister says on that point.
Lord Kingsland: My Lords, it is my task to address Amendments Nos. 149A, 158C and 158D.
If Amendment No. 149A is accepted, legal assistance will not be restricted to market abuse proceedings, which are the subject of Section 123(4), but will extend to all disciplinary proceedings initiated by the authority under the Bill. As the Minister is well aware, legal assistance is expressly provided for under Article 6(3) of the European Convention of Human Rights; that is to say, it expressly applies to criminal offences. However, as the Minister is also aware, in three recent cases in the European Court of Human Rights, it has been held that the right to legal assistance is also inherent in the protection provided by Article 6(1). The leading case is, perhaps, Rowe v. Davis, where the court stressed that Article 6(3) merely sets out examples of a fair hearing; the obligation is already contained in Article 6(1). Indeed, that point was dealt with almost a decade earlier in the case of Edwards v. the United Kingdom.
In short, it is our contention that the protections provided by Article 6 apply to the determination of all civil rights and obligations, not merely to the rights in relation to criminal accusations. Therefore, all

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disciplinary proceedings under the Bill should, in appropriate circumstances, attract legal assistance to the aggrieved party.
As regards Amendments Nos. 158C and 158D, the Government have already accepted what has come to be known as "Saunders proofing" for proceedings under that part of the Bill which deals with market abuse. In that context it is worth mentioning that in the Saunders case, in which the United Kingdom government were the defendant, the European Court of Human Rights said that non-admissibility as regards evidence was required by the fair hearing provisions of Article 6.1 not just by the provisions of Article 6.3.
In brief, it is our contention that Saunders proofing ought to apply to disciplinary proceedings under the Bill and not just to proceedings concerning market abuse. I beg to move.
3.30 p.m.
Lord McIntosh of Haringey: My Lords, before I move to the amendments before us, perhaps I may thank the noble Lord, Lord Saatchi, for drawing the attention of the House to the proposed merger of the London Stock Exchange and the Deutsche Börse and other noble Lords who have supported him in his expression of concern. I can reassure the noble Lord, Lord Saatchi, without hesitation that the full details of the merger have yet to be worked out. The FSA will need to look carefully at the regulatory implications of what emerges.
However, I understand that the intention is that the merged company will be based in, and managed from, London and that the market for blue chip shares in London will continue to be a recognised investment exchange overseen by the Financial Services Authority. The London Stock Exchange and the Deutsche Börse have also said that it is not envisaged that there will be any change in the regulatory arrangements for national markets. The regulatory framework provided by the Bill is an appropriate one and therefore there is no need for any amendments to the Bill.
Lord Elton: My Lords, perhaps the noble Lord would be kind enough to expand on that. Where transactions of the new joint exchange take place in Germany and not in England, will they be subject to British or German regulation? How will inquiries etc. be managed in such cases?
Lord McIntosh of Haringey: My Lords, the noble Lord did not use the words "super euro regulator" but they have been used. I do not care for that form of words. If there were to be a super euro regulator, that would require legislation at Community level. I have no knowledge that that is proposed. As regards who will be the competent authority for listing following the merger, as has been recognised, we have already amended the Bill in the light of the proposed demutualisation. The competent authority is, and will continue to be, the FSA. Part IV of the Financial
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Services Act has already been amended by regulations made under Section 2(2) of the European Communities Act so that the authority is the UK competent authority for listing under that Act.
Lord Elton: My Lords, I am sorry to delay the House, but sometimes the most stupid Member is the most useful because he reveals difficulties which others may not have regarded as being difficult. If a German citizen has business conducted at the German end of this new body and believes that, perhaps with justice, he has been wrongfully dealt with, will his recourse be local or will it be to London? If it is to London, surely we need to take account of that in this legislation.
Lord McIntosh of Haringey: My Lords, as the noble Lord is perfectly well aware, we are in a transitional stage between host state and home state regulation. Therefore, any answer I give to the noble Lord would necessarily be a transitional answer, which might be changed at some future stage.
While there is host state regulation, it is the location of the authorised person which determines the regulatory authority. When a move to home state regulation is complete, it will be the location of the consumer which is the relevant consideration. I believe the noble Lord's concern is that there might be some stage at which there is no proper regulatory body. I can assure him that literally dozens of pages of the Act are devoted to the issue, which is not new and not dependent on the merger of the London Stock Exchange and the Deutsche Börse to ensure that there will be neither overlap nor a gap between the provisions of regulatory authorities in different countries.
As I have just been passed a note, perhaps I may see whether there is anything further that I can add to reassure the noble Lord, Lord Elton. I am advised that nothing has changed. People in Germany can trade on the London Stock Exchange now. Where people engage, for example, in abusive behaviour, it will be possible for the local regulator, and perhaps the overseas regulator, to take action. There are arrangements in place for co-operation. I believe that that confirms what I have already said off my own bat, so to speak, as regards the fact that there is no problem either of overlap or of a gap in jurisdiction.
Lord Saatchi: My Lords, will the Minister allow just a moment for me to sum up my understanding of what he has said and express some residual concerns which are left? I am grateful to the noble Lord for his reply and to other noble Lords who have spoken.
Perhaps I may reflect on the point made by my noble friend Lord Northbrook. Clause 2(3)(e) states,
"In discharging its general functions the Authority must have regard to"—
we have discussed these words many times in our debates—
"maintaining the competitive position of the United Kingdom".

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It strikes many observers that there must be a conflict of interest in the job of being the regulator and supervisor of an exchange which includes another country. That is a problem which puzzles people.
Let us consider the EC directive on the mutual recognition of stock exchanges. That assumes that each country has its own designated stock exchange. Until last week that was true: each country had its own listing authority and stock exchange. After this merger we shall have two listing authorities, but only one stock exchange.
One of the points that arises is that as from 1st May one has to apply to the FSA to have one's shares admitted to the official list and then to the London Stock Exchange for the right to deal in those shares. But, following the merger, the admission to deal will be for dealing on the merged entity. Will the FSA have a supervisory reach over those newly listed shares on the new exchange? Is it not true that German and British shares are now subject to different listing requirements?
Therefore, is it not true that this Bill cannot be the last word on the regulation of the Stock Exchange? There will have to be consistency in listing requirements. Therefore one is bound to ask what proposals the Minister will bring forward in due course for a statutory framework for regulation of the new exchange without which the FSA will appear to be operating in an uncontrolled environment?
Lord McIntosh of Haringey: My Lords, since we are at Report stage and if we are to continue with this debate, it might be better if a separate opportunity were found for a proper debate on this matter. I am grateful to the noble Lord for seeking to raise the matter because perhaps that avoided a Statement, a Private Notice Question or some other more time-consuming business.
Clearly, my responses to the noble Lord must be confined to those matters which may be thought to be affected by this Bill. That is what I have done. I hope that I have given the noble Lord an absolute assurance that the problems he anticipates simply will not occur. In my first answer I said that the merged company will be based in, and managed from, London and that the market for blue chip shares in London will continue to be a recognised investment exchange overseen by the FSA.
I believe that that answers the noble Lord's quite specific point. As regards the more fanciful suggestions that the FSA might have to be merged with some other body, they are just that—fanciful suggestions. There are other regulatory bodies in other European countries and in particular in Germany. When and if the regulatory bodies in the other countries reach the standard which we believe we are pioneering in this country with this legislation, and when they are willing, ready and able to take on comparable responsibilities, then what is open to us is not a super regulator, in case anyone is afraid of that, but home state regulation, which is a more simple and rational basis for regulation than that which we have
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at the moment. The kind of border difficulties that seem to be anticipated by some noble Lords will no longer be in prospect. I give way.
Lord Hunt of Wirral: My Lords, I thank the Minister. I appreciate the flexibility that the noble Lord is showing when dealing with certain very fundamental questions about this Bill. However, perhaps we should bear in mind the fact that the FSA issued a press release in which it said it was working closely,
"with our German supervisory colleagues … with whom we already co-operate closely, to arrive at a sensible regulatory outcome for IX".
I suppose that what both noble Lords and I are asking is that we should be kept informed as to what this "sensible regulatory outcome" will be. Perhaps the Minister will undertake to keep us in touch with such developments so that we can then consider, if possible before Third Reading, whether further amendments are needed to bring it into effect.
Lord McIntosh of Haringey: My Lords, I believe that my responsibilities begin and end with the assurance that I have given to the House that no amendments to this Bill are required as a result of the events that have taken place, or are in the course of so doing. Of course the FSA is in discussion with the German regulator; indeed, that is entirely right. No doubt the FSA will consider it its duty to make public the results of those negotiations as and when it thinks fit. That is not a responsibility of the Government and it is not my responsibility as the Minister responsible for steering the Bill through this House.
A confusion has arisen with which I believe I should now try to deal. The obligation in Clause 2 of the Bill to maintain the competitiveness of the United Kingdom is an obligation on the FSA; it is not an obligation on every single listed exchange or clearinghouse. Even before this merger was proposed, the London Stock Exchange was on line to be demutualised—in other words, to become a private company. It is not the role of government or of legislation to state what its object should be. As long as we stick to the rule that it is the FSA which has among its principles the maintenance of the competitiveness of the British economy, we shall not: fall into the trap of thinking that that must, therefore, be the obligation of all authorised persons.
There is a danger of confusing listing, which is dealt with in Part VI of the Bill, and the regulation of trading markets that is dealt with in Part XVIII. There is only one listing authority under Part VI—namely, the FSA—and its remit under those provisions is in relation to issuers. Part XVIII of the Bill provides sufficient flexibility to enable the FSA to regulate the proposed new markets.
With the leave of the House, I think it might be proper for me to move on now to deal with the amendments before us. Clause 131 gives the Lord Chancellor the power to establish a subsidised legal

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assistance scheme by regulations. This is a freestanding scheme for legal assistance and not an extension to legal aid.
Assistance is to be provided to individuals who have referred to the tribunal a decision of the FSA to impose a penalty for market abuse. It also covers cases where the FSA proposes to make a public statement that an individual has abused the market. The limitation to market abuse proceedings reflects the fact that this scheme is to be established, as a precaution, for this category of cases where we think it is appropriate to apply the full criminal protections under the European Convention on Human Rights.
The effect of Amendment No. 149A would be to widen the coverage of the scheme to cover all decisions referred to the tribunal. This is not necessary as a matter of law, and I do not think that it would be sensible to do this as a matter of public policy. Legal assistance is not generally available in tribunal proceedings, which are intended to be speedier and less formal than court proceedings.
As I said, the additional protections that have been put in the Bill in relation to market abuse were included as a precautionary measure because of concern expressed about the possibility that the market regime might be judged to be "criminal" for ECHR purposes. The noble Lord, Lord Kingsland, repeated the claim that he has made on a number of occasions—and, indeed, in the context of a number of Bills—that this has to be a criminal offence and that the ECHR has said so. I have to point out that lawyers disagree on this matter. I am aware of what the noble Lord, Lord Kingsland, says, just as I am aware of what the noble Lord, Lord Lester, and the noble and learned Lord, Lord Millett, say. However, our evidence to the Burns Committee from Sir Sydney Kentridge and Mr James Eadie made it clear that we take the view that this is primarily a civil regime.
Perhaps I may make an analogy with the professions. For example, doctors practising medicine are subject to regulation by the General Medical Council. The European Court has had occasion to consider whether the disciplinary regime that applies to doctors, lawyers and architects should be dealt with as a civil or a criminal matter for ECHR purposes. In each case, it decided that the regime was civil. That is the analogy; it is not with the legal assistance scheme we are proposing, which is confined to market abuse, but with the legal assistance scheme that would be extended in the way suggested by these amendments.
We do not see any need to extend this protection for the exercise of the various disciplinary and other supervisory powers of the FSA, such as the power to vary a Part IV permission to restrict the carrying on of a particular kind of regulated business. These decisions are concerned with the setting and policing of standards for the regulated community and, in that
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respect, are analogous, as I said, to the regulation of professions. There is no need to extend the scheme further. As authorised persons are to pay for legal assistance under the scheme, I suggest that they are entitled to be sure that we should keep the scheme within proper bounds.
Amendment No. 158D seeks to extend protections concerning the use of compelled evidence in proceedings to those involving disciplinary measures under Part XIV, in the same way as for penalties and statements for market abuse. Again, we have included this protection as matter of precaution for market abuse cases. The amendment is unnecessary as a matter of law, as Sir Sydney Kentridge said in our evidence to the Joint Committee. Similarly, it is undesirable as matter of policy because it would place an unhelpful restraint on the FSA's ability to deal with misconduct by regulated persons.
Criminal offences, or market abuse, may be committed by a wide range of people, but disciplinary penalties under Clause 202 apply only to authorised persons. Authorisation is not just a privilege that allows a person to do financial services business; it also involves obligations. One of the most important of those obligations is to be frank with the FSA about how the authorised person's business has been conducted, including in cases where there has been misconduct.
It is important that the regulatory system should be as effective as possible in order to protect consumers, maintain market confidence and reduce financial crime. In appropriate circumstances the use of compelled evidence can be valuable for the regulatory. The existing financial services regulators use compelled evidence at present. I can see no reason to put unnecessary obstacles in the way of effective regulation. I have to resist these amendments. I hope that the noble Lord will not press them.
3.45 p.m.
Lord Kingsland: My Lords, the Minister referred to "unnecessary obstacles" being put in the way of effective regulation. However, at an earlier stage of his intervention, he said that it was highly desirable for there to be disciplinary procedures under the Bill. The Minister indicates that perhaps my noble friend Lord Saatchi should now be responding. I understood from my noble friend's opening words that he was not introducing the amendments and that that would be my task.
From my noble friend's discussions with the Minister earlier today and before proceedings commenced, he understood that he could make his opening statement about the merged stock exchange

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but that I would move the amendments in this group. That is why at the end of my intervention I said, "I beg to move".
Noble Lords: Oh!
Lord Kingsland: My Lords, I am much obliged to the Minister. I now have to recall what I .just said in order to press home the devastating point that I was about to make!
Lord McIntosh of Haringey: My Lords, I do not make the rules in this House; the rules are made by the House itself.
Lord Kingsland: My Lords, that is precisely my point. That is why I rise to speak, as I rose to speak previously. The House is clearly agreed that the procedure that I decided to follow is the appropriate procedure for your Lordships' House.
I think I was saying to the Minister that he was stressing the value, informality and speed of these proceedings. Nevertheless, the result of these informal, speedy proceedings may mean the unfair ruin of an authorised person. Therefore, the fact that these proceedings are informal does not mean that the protections under the convention, such as they are, ought not to apply.
The noble Lord said that the criminal provisions of Article 6 do not apply to disciplinary proceedings. I readily accept that that may be true, although it may not he true. That remains a matter of debate between those lawyers who are experts in this field.
However, it is not true to say that just because a matter is not a criminal matter for the purposes of Article 6, it should not nevertheless attract, in appropriate circumstances, legal assistance. My point is that, irrespective of whether disciplinary proceedings are criminal, a party who faces a trenchant punishment for being held to be in breach of the rules should, in appropriate circumstances, be the beneficiary of legal assistance.
I believe it to be further reinforced by the fact that the money that would be paid for such legal assistance comes from the authorised bodies themselves. The money does not come from the state. It comes from the pool of money that is provided by the City to the FSA. I contend, therefore, a fortiori that an authorised person, who is unable to provide for his own defence in a disciplinary proceeding, ought to have the support of the money that he himself, and the body that he worked for, paid to the FSA to provide the legal assistance which he requests.
I know that this matter will remain an issue between us throughout the afternoon and evening as regards other parts of the Bill. For that reason, at this stage I prefer to withdraw the amendment rather than press it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 133 [Funding of the legal assistance scheme]:
Lord Kingslandmoved Amendment No. 149 B:
Page 64, line 20, leave out paragraphs (b) and (c).
The noble Lord said: My Lords, I can deal with this matter extremely quickly. The issue here is simple. If an authorised body has paid money into the legal assistance scheme, it is our contention that it should be entitled to get it back in circumstances where there is a surplus, irrespective of whether that authorised body has any other debts which it owes; in other words, there should be no set-off against a surplus of legal assistance funds. I beg to move.
Lord McIntosh of Haringey: My Lords, the effect of opposition Amendment No. 149B would be, unfortunately, to reduce the flexibility of how funding for legal assistance is collected and distributed. As the noble Lord, Lord Kingsland, said in speaking to the previous amendment, the legal assistance scheme will be paid for by levies raised by the FSA from authorised persons. The Lord Chancellor will determine the costs of the scheme and set the total which the FSA is required to raise in levies from authorised persons for a particular period. The FSA will decide on the best way to apportion this cost.
One cannot forecast precisely the amount required for legal assistance in any forthcoming period. Subsection (1) of Clause 133 provides for levies to cover anticipated or actual costs. This enables the levy to be set on as accurate a basis as possible for the forthcoming period. If the forecast of anticipated costs is an overestimate, subsection (7) enables the FSA to distribute the money back to the authorised community. Paragraph (a) allows it actively to repay the money directly to those who paid the levy, while paragraph (b), which the amendment seeks to delete, allows it instead to reduce amounts which those persons are required to pay. Paragraph (c) allows for a combination of those methods. If we retain paragraph (a), but not paragraphs (b) or (c), the FSA would have to distribute small amounts which it can much more sensibly and economically offset against the following year's fees or levy for invoicing purposes. Removing options (b) and (c) could lead to excessive costs being incurred sending out cheques for derisory amounts.
Of course, the FSA will need to exercise its discretion. I am afraid that the amendment would simply make it more difficult for the FSA to exercise a perfectly reasonable, justifiable and economical discretion.
Lord Kingsland: My Lords, I am disappointed at the Minister's reply. In my submission, the legal assistance provision should be kept quite distinct from the general administrative budget. However, at this juncture, I do not think that it would be appropriate for me to ask the opinion of the House. Therefore. I beg leave to withdraw the amendment.
The Chairman of Committees (Lord Boston of Faversham): My Lords, I believe that the House is not quite clear as to the intention of the noble Lord, Lord

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Kingsland. He said both that he wished to withdraw the amendment and that he wished to test the opinion of the House.
Lord Kingsland: My Lords, I beg the pardon of the House. I think that I said that I did not wish to test the opinion of the House and, therefore, wished to withdraw the amendment. I am sorry if I am even more inarticulate than usual this afternoon.
The Chairman of Committees: My Lords, I am sorry that I misheard the noble Lord, Lord Kingsland. I thank him for his comments.
Amendment, by leave, withdrawn.
Clause 135 [General rule-making power]:
Lord Hunt of Wirralmoved Amendment No. 150:
Page 66, line 5, after ("from,") insert ("dependent on,").
The noble Lord said: My Lords, first I thank the Minister for having generously taken the time to meet the Association of British Insurers and the British Bankers' Association, together with myself, to discuss the definition of "consumer". To quote my noble friend Lord Kingsland, I was being offered the "Lord Hunt of Wirral facility". I have never been able to probe exactly what this means, but if it means the generosity of the Minister I thank him publicly for that. I, Mr Leighton and Mr Mason felt that we had an opportunity to air concerns about the definition of "consumer".
The definition is, of course, used throughout the Bill and is more generic than the normal use of "consumer" in that it extends to any user of an authorised person's services. In that context, the Minister will be aware that I have expressed some concern that it therefore extends to those who do not directly use the services of an authorised person but are nevertheless affected by the use of those services by another, for example, the clients of a fund manager or the beneficiaries of life insurance.
Although the wording currently found in Clause 135(7)(b)(ii) undoubtedly covers the situation of a trust beneficiary, I believe that it widens the scope of the definition too far by moving away from some kind of causation (derived from or otherwise attributable to) to a general adverse effect. I believe that I gave the Minister examples of third parties with no direct rights under liability insurance policies; small shareholders or employees, who may feel that their rights are adversely affected by the take-over activities of a pension fund user or fund manager; or, once mortgage lending has become a regulated activity, neighbours affected by a new purchaser with a mortgage. I also gave the Minister an example of someone who may be affected in some way by an environmental incident. Their rights obviously would exist if there was valid insurance; they would not exist if there was not.
If I might explain to the House, the Minister has tried to allay my fears by saying, "You have to read any definition within the Long Title of the Bill". I agree that the provisions in any Bill have to be read in the
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context of its long title, but I do not believe that one should have to rely on that in working out a particular definition. I am concerned about the potential coverage of persons who have rights or interests which may be "adversely affected". That is why the second amendment standing in my name seeks to delete those particular words.
The Minister kindly said that he would carefully consider the amendment. I hope that he will be able to give me a positive response. I beg to move.
4 p.m.
Lord Kingsland: My Lords, I rise to speak to Amendment No. 151ZA, which is in this group.
I am rather surprised that the Government have not moved a little more on this point as a result of the useful debate we had in Committee. Clause 135 is the provision in the Bill which sets out the authority's general rule making power. Rules made under Clause 135 apply to authorised persons. The governing principle for making these rules is that they must be,
"necessary or expedient"—
in the view of the authority—
"for the purpose of protecting the interests of consumers".
The definition of "consumers" is to be found in Clause 135(7) and it is used elsewhere in the Bill. It is therefore of some importance. The amendment proposed is intended only to clarify the position.
Subsections (8) and (9) of Clause 135 appear to be supplementary to subsection (7). Indeed, subsection (9) begins with the words,
"For the purposes of subsection (7)".
There are no similar qualifying words in subsection (8).
The amendment seeks to correct what appears to be, quite simply, an omission. If this is not done, it would be possible to argue that subsection (8) is intended to have a more general application. One possible consequence is that all the beneficiaries of a trust—including potential beneficiaries under a discretionary trust—where the trustee is an authorised person, may be considered to be customers of that authorised person because, under subsection (8), they are to be treated as using the services of the authorised person. We assume that this is not the intention and that subsection (8) should apply only for the purposes of the "consumer" definition in subsection (7). We should simply like to have the issue clarified, hence our amendment.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord, Lord Hunt, for taking the trouble to table the amendments and for taking the time to come to see me, with his colleagues from the ABI and the BBA, to discuss his concerns.
As he said, he is concerned that the definition of "consumers" in Clause 135 is too broad because it extends to people who have rights or interests which may be adversely affected by the use of services by other people. In particular, he is concerned that this will mean that the FSA is trying to make wide and

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detailed rules to protect consumers who stand at some considerable distance from the use of financial services. I have considered this point carefully in the light of the points raised in Committee and in my discussions with him. I hope that I can offer him some reassurance.
As he recognised, one cannot analyse Clause 135 in isolation. It is not only a matter of the Long Title but of looking at the interests and protection of consumers with in the overall context of the Bill. In particular, first, the scope of the definition of "consumer" has to be seen in the context of the Bill's Long Title. The FSA's functions relate to the provision of regulated financial services and not to the general behaviour of customers where that is unconnected to the provision of such services.
Secondly, the FSA must exercise its functions in the light of the regulatory principles set out in Clause 2. These include the need to use its resources in the most economic and efficient way, and the desirability of facilitating competition. Both of these principles apply important balances to the scope of FSA regulation, but the key principle, also set out in Clause 2, is that regulation must be proportionate to the benefits.
Thirdly, Clause 5 makes it clear that the FSA should seek to secure the appropriate degree of protection. So it has to exercise its powers and seek to meet its objectives in a balanced, proportionate and appropriate way.
The reference to people who have rights or interests which may be "adversely affected" by the use of services by other people makes sure that rules can be made to protect those people for whom someone else—let us call him the middleman—uses financial services provided by an authorised person. Subsection (7)(b)(i) will cover persons whose rights or interests are derived from or are otherwise attributable to the middleman. An example might be a spouse or other person who is intended to benefit from a life insurance policy.
But where the middleman is acting in a fiduciary or representative capacity, these rights or interests may be derived from something other than the use of the service itself. For example, trust beneficiaries may have rights or interests deriving from the trust itself, or from decisions made by the trustee in exercising his discretion under the trust. If we are going to protect these people, we have to have the reference to people being "adversely affected" by the use of services in subsection (7)(b)(ii).
The amendments of the noble Lord, Lord Hunt, seek to replace the reference to "adversely affected" with a reference to people whose rights or interests are "dependent" on the use of services by other persons. It is a refinement on the amendment moved in Committee. I am grateful for the care that the noble Lord has given to the matter, but the concept of a right or interest being "dependent" on the use of services would not apply in all the circumstances in which a person can act on another's behalf and where we believe that it is appropriate that the FSA should be able to make rules with a view to protecting that other person's interest.
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I am sure that the noble Lord, Lord Hunt, will appreciate that it is a difficult, technical matter to try to capture the people that we are seeking to protect But it is important that they should be protected. They include, for example, members of pensions schemes. They should not be left outside the definition of "consumer".
We feel that the concerns that have been raised about the effect of the definition of "consumer" on the scope of the FSA's regulatory activities are exaggerated. I have mentioned the safeguards that are, built into the Bill—the principles under Clause 2; the consumer-protection objective as defined by Clause 5: and the Long Title of the Bill.
But we have considered—I am willing to consider it further before Third Reading—whether it is possible to formulate a definition of "consumer" that offers a more explicit reassurance about the scope of the rule-making power without creating holes in the FSA's ability to protect consumers. As I mentioned, these amendments may exclude particular groups of persons who should be treated as consumers. I hope that the noble Lord will not press them.
I turn now to Amendment No. 151ZA, which deals with the provisions about trustees in Clause 135(8). The trustees with whom subsection (8) is concerned are those who themselves perform a regulated activity in their capacity as trustees. This is distinct from the example of a trustee using the services of a third party, which I gave earlier. The purpose of subsection (8) is to make clear that the beneficiaries of the trust in these circumstances fall within the definition of "consumers".
The core definition of "consumers" is indeed in subsection (7). It refers to people,
"who use, have used, or are or may be contemplating using … services".
Strictly speaking, a trust beneficiary may not necessarily "use" the services provided by a trustee acting in his capacity as a trustee, and so he could fall outside the scope of the definition in subsection (7). So subsection (8) makes it clear that those trust beneficiaries are to be treated as "using services". In achieving this, it ties itself directly to the wording in subsection (7), saying that trust beneficiaries are to be treated as people,
"who use, have used, or are or may be contemplating using … the services".
The two provisions are entirely interlinked. There can be no doubt that subsection (8) amplifies subsection (7), and that it does nothing more. I hope that the noble Lord will not press that amendment.
Lord Hunt of Wirral: My Lords, I thank the Minister for the generous way in which he has approached this subject and for his willingness to listen and to continue the search for clarity. We are all seeking to make the Bill more certain, particularly so far as concerns definitions. The way in which the Minister laid out how he believes the definition of "consumer" has been circumscribed by the context in which it is to be found was helpful. In those

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circumstances, I should like to reflect on what he said and join him in seeing whether there is a better way to achieve our combined objective. I therefore beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 151 and 151ZA not moved.]
Lord McIntosh of Haringey: My Lords, I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

Rover
4.10 p.m.
Lord McIntosh of Haringey: My Lords, with the leave of the House, and on behalf of my noble friend Lord Sainsbury of Turville, who is at this moment giving evidence before the Trade and Industry Select Committee in another place and therefore sends his apologies for his unavoidable absence, I should like to repeat a Statement which has been made by my right honourable friend the Secretary of State for Trade and Industry. The Statement is as follows:
"I should like to make a Statement concerning the latest developments at Rover. Earlier today BMW announced that they have agreed to sell Rover cars to the Phoenix consortium. Negotiations have been concluded and contracts signed.
"This is clearly welcome news—for the workers at Longbridge and the wider community in the West Midlands. I am sure it is news that all Members will welcome, especially my honourable friend for Birmingham Northfield, who is at Longbridge this afternoon and has worked hard to support the workforce during this difficult period. It will preserve volume car manufacture at Longbridge and will safeguard the majority of jobs there, and minimise the knock-on effects in the supply chain.
"I should like to add my personal congratulations to John Towers on the way in which he pulled the consortium together and brought what I know must have been difficult negotiations to a successful conclusion. He has been determined and dogged in the face of hostility and criticism. His personal strengths will be invaluable to the Phoenix consortium.
"Since BMW announced its decision to sell Rover, the Government's main concern has been with the workers at Longbridge, Rover suppliers, their families and communities. They have faced a considerable period of uncertainty over the past six weeks. It has been something of a rollercoaster for them—swinging between dismay and hope, as their future was decided in various negotiations with BMW. Today's news finally provides some welcome certainty for the Longbridge site.
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"However, there will still be some redundancies. Our priority is to do everything we can to help those affected, to provide training and to attract new jobs to the area. That is the role of government: to manage change; to equip people for change; not to leave them to be the innocent victims of change.
"We have always been clear that the role of government is not to run the commercial negotiations between the interested parties. The Phoenix consortium has not sought government finance for its proposals. John Towers has always maintained that the Phoenix bid is viable on its own and would get funding from commercial sources. The Government have not played the old role of throwing money at a problem in the hope that it will go away. Nor have we adopted the laissez faire attitude of the previous government—just standing to one side and doing nothing.
"Instead, we have taken an active role to facilitate the commercial negotiations over the future of Rover and to provide support for those workers and companies adversely affected by commercial decisions. Our role has been to bring people together to look at how to move forward. It was the Government who brought John Towers and BMW together for their first face-to-face meeting on 10th April. And we have remained in contact with both parties throughout. We must now turn our attention to those who will be adversely affected by today's announcement.
"I am pleased that most of the workforce will be offered a future at Rover. But today our thoughts must be with those who will lose their jobs. The Government will be doing all they can to help with this situation. I can announce that the task force will remain in place, and I expect its continuing work will take account of all developments, including the consequences of Phoenix's plans for suppliers. It will produce its final report to me in June. My right honourable friend the Secretary of State for Education and Employment and I have already put in place measures to assist any workers made redundant, to help affected supplier companies, and to help attract new investment and employment.
"I am also able to confirm that the £129 million promised to the task force will remain available for good quality projects in the region which provide long-term economic regeneration and job creation.
"We must not underestimate the remaining difficulties ahead. The new owners of Rover will have to sell cars in a highly competitive market. The car industry is a fast moving global market going through major structural change. These are difficult times for vehicle manufacturers throughout the world. But there have been a number of recent announcements which show the strength of vehicle manufacture in the United Kingdom.
"Only last week, Vauxhall announced £189 million of new investment, which will create 500 new jobs at its Luton factory. Honda has announced 130 million of investment in Swindon to allow the production of a new model. Peugeot doubled its

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production in the UK in the past year. Jaguar achieved record sales and record production in 1999. And last month's sales figures showed that British built cars increased their sales, against the general trend.
"There will be many lessons to be learnt from Longbridge upon which we will need to reflect. However, it is clear that there can be no return to outdated interventionism. The corporate state has been tried and it simply did not work. But nor did a naive reliance on laissez-faire, which led to a crippling obsession with what Government should not do. The role for Government is to create an environment which encourages enterprise and creates wealth and jobs.
"But today belongs to John Towers, the Phoenix consortium, the workers at Longbridge and the people of the West Midlands. Through adversity they have demonstrated great strengths and we look forward to working with them to meet the challenges that lie ahead".
My Lords, that concludes the Statement.
4.16 p.m.
Lord Mackay of Ardbrecknish: My Lords, perhaps I should first say how pleased I am that the noble Lord, Lord McIntosh of Haringey, has made the Statement. Given the fact that he does so much work, it seems only fair that he is allowed to give the good news as well as sometimes deal with some of the more difficult issues.
I am sure that everyone shares the Government's relief at this outcome. But, equally, I am sure that it is nothing to the relief which is being felt in the West Midlands. The whole House will wish John Towers and his consortium well in what will not be an easy task. I noticed that the Minister did not make light of the difficulties that will be facing the consortium. As the Secretary of State has received an accolade from no less a person than the Prime Minister for brokering this deal, will he be keeping a close eye on the progress of the deal and trying to solve some of the difficulties that will come through as the months pass?
That is particularly important when it comes to the number of people who will be made redundant. Various numbers have been speculated about—1,000 or 1,500. Can the Government help in that regard and give an indication of how many may be made redundant, not just in the car company itself but how that might produce a knock-on effect in some of the component companies?
Even though the task force may not have the uphill struggle it sometimes looked as if it might have to face, it will still have a difficult task in order to find jobs for those who are made redundant. I very much welcome the fact that the £120 million which has been pledged to the task force is to remain available. Has that been cleared by the European Commission?
On the subject of the European Commission, Ministers will recall that the Government had promised £150 million to BMW, although clearance had not been received from the Commission by the time BMW decided that enough was enough. I heard
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the Minister say that John Towers and his consortium had not asked for that £150 million. But perhaps I may ask whether it would still be available to them if they did ask for it.
BMW had planned to spend £1 billion on retooling the plant in order to produce a new generation of models. Is the Minister satisfied that the consortium can get access to that amount of money? It is hugely more than the £200 million mentioned in the Statement and already coming from an American bank. If it cannot get access to that kind of money, will it be looking for some kind of joint venture to provide the investment which Longbridge undoubtedly needs? I read on what we must now call the "Web" rather than the tapes that a production worker in Birmingham, Mr Roger Voice, is quoted as saying,
"It's magic news"—
none of us would disagree with that—
"but I would have to say what is the long-term plan?".
Will the Minister give some indication of the longterm plan?
BMW also owns a body plant at Swindon, which I gather employs some 3,500 men. I wonder what the position of that plant is. Phoenix has said that it has "an option on the plant". What exactly does that mean? Are there plans for its continuation?
I turn to the £500 million which the consortium will receive from BMW. What exactly is that money for? Some of it, but it is to be hoped not the whole amount., will clearly be used to fund redundancy. Do I detect that what is not required for redundancy payments may well be needed for pension fund provision, to make sure that the pension fund as it is handed over to Phoenix is in a proper state of health? I should be grateful if the Minister would clarify the position. Although it is important to have money available to fund redundancy, it is important also for the workers to know that their pension funds are secure.
While Rover sales have recently been very encouraging, do the Government accept that the rate of the euro against the pound does not help British car companies to export into Europe? Perhaps the Minister can help John Towers by having a brief word with the Chancellor of the Exchequer about this difficult problem.
Finally, perhaps I may repeat my welcome for this news and give my best wishes and those of this side of the House, and I am sure the whole House, to John Towers and his Phoenix consortium for the success of what I believe is a brave venture.
4.21 p.m.
Lord Razzall: My Lords, I should like to join in the congratulations given by the noble Lord, Lord Mackay, and I am sure Members on all sides of the House, not only to the Government on bringing forward the Statement but also to the Towers consortium. Clearly, they have pulled off a remarkable effort, contrary to every expectation in the financial world and the financial press and to the questions about whether it was capable of being done.

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Many of us have not yet seen the detail, if we ever shall, of the "boiler plate" of the transaction, but there are obviously third party organisations which are to be congratulated on their participation in the consortium. Presumably, the much vilified BMW deserves just a slight paean of praise for its participation in the financial transaction that has resulted in the Statement; as do the American banks or financial institutions which have been induced, as we are led to believe from reports in the press, to put up the £200 million of overdraft finance that the UK clearers were not prepared to put up.
I share the feelings of other noble Lords about the Statement. Its tone is absolutely right so far as the Government are concerned. This is not a self-congratulatory Statement or one in which they blow their own trumpet. All noble Lords will be grateful for that. The Government will recognise, notwithstanding the criticism that the Secretary of State has had piled upon him in the past month or two, that it would indeed be tempting for him to make the proverbial gesture with two fingers towards his critics at this moment. I am glad that he has not chosen this opportunity to do so. I listened to him making the Statement in another place. A Labour Member behind him said that there should be drinks and dancing in the streets. The Secretary of State is wise enough to realise that this is not necessarily a moment for dancing in the streets. Perhaps a modest sherry might be appropriate rather than a vintage cru. He will be the first to recognise, as will the House, that there are significant difficulties ahead for this operation. As we all know, and as many Members on the other side of the Chamber demonstrated the last time we debated the matter, there is significant surplus capacity for mass market vehicles in Europe at present. That problem has not been waved away by this transaction.
There are suggestions that, particularly at Longbridge, productivity is not what it might be. That is certainly the case in comparison with a large number of competitive mass-market plants in Europe. Dare I say that the Rover mark is not necessarily the hottest mark if you want to buy a modern mass-market car? As the noble Lord, Lord Mackay, has indicated, a massive investment programme is still necessary as regards Longbridge and to turn Rover cars into the mass-market vehicles which the consortium clearly wants them to be. There must be a question mark over where that funding will come from.
That said, I do not want to carp. This is clearly a very good day for Britain and for the motor car industry. Noble Lords would not expect me to sit down without saying—I anticipate the groans that will come from my left, or should I say my Right?—that not only is this an opportunity for the Government to think longer term about the problems of the West Midlands; it is the moment for them to take time to reflect on the damage that the exchange rate is doing to manufacturing industry and the damage that Britain's failure to join the euro is doing to manufacturing industry and to come up with a policy to get us in there as soon as possible.
4.25 p.m.
Lord McIntosh of Haringey: My Lords, I am grateful to both noble Lords for the way in which they have responded to the Statement and for the unequivocal support they have given to the result of very difficult negotiations over the past month. I am particularly grateful to the noble Lord, Lord Razzall, for his remarks about the tone of the Statement. Certainly, although we rule out the policy options both of interventionism and of laissez-faire, nevertheless, it would be easy to be triumphalist about this. Although my right honourable friend the Secretary of State deserves a great deal of credit for having brought the two parties together for the first time on 10th April, he has shown great restraint in the way he has phrased his Statement.
To respond to the noble Lord, Lord Mackay, the Secretary of State will certainly be keeping a close eye on progress in so far as it is proper for him to do so; in other words, in so far as he is not interfering with the commercial relationships of the two companies.
The noble Lord asked me whether I had any further information about the numbers of likely redundancies and likely knock-on redundancies in the West Midlands other than at Longbridge. I am afraid that I do not have any further figures. I heard the figures quoted by the noble Lord, but no doubt these issues will become clearer in the next few days.
The noble Lord, Lord Mackay, asked also whether the task force money, which will continue, has been cleared with the European Commission. Perhaps I should make it clear that the £158 million that was originally proposed in assistance included the £129 million of task force money for the West Midlands. That money was never intended to go to Rover, whether under Phoenix or any other arrangement. It is money that is largely regional assistance to the West Midlands for retraining, skills training and so on, and is therefore not subject to any European Commission regulation.
The noble Lord asked also whether there are likely to be any further joint ventures. I am afraid that it is too early for me to give any response to that question. The noble Lord is right in saying, as did the noble Lord, Lord Razzall, that there will have to be longer-term plans for the future of the Longbridge site and they must include not only the production and sale of existing models but the development of new models. In the motor car industry, firms cannot simply stand still.
The noble Lord asked what the future of the Swindon plant will be. Swindon will stay with BMW, which will no doubt make announcements about the Swindon plant in due course. I am not aware of any threat to employment at the Swindon plant.
The noble Lord asked me, quite properly, where the £500 million sweetener—I do not believe that he used that term—from BMW to Phoenix would go. My answer is that as little as possible should go in redundancy and pension payments because there should be as few redundancies as possible. As much as possible of that sum should be devoted to continuing

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the production, marketing and sales of vehicles produced at Longbridge. I am sure that that is the intention of the Phoenix consortium.
The noble Lord, Lord Razzall, made some welcome and helpful remarks about the role of the banks. Critical comments have been made in the past few days about the unwillingness of banks to support ventures of this kind. I do not have any further details about the banks which have contributed. However, they have made a valuable contribution, and the Government are grateful to everybody who has taken part in this matter. The noble Lord, Lord Razzall, is right to say that there is surplus capacity in the car market in Europe as a whole and large parts of the world. The fact that in this country in the past month Rover sales have gone up while those of BMW have reduced substantially is very welcome. That may simply be an emotional reaction, and perhaps Rover-Phoenix should not bank on that market share continuing in future months. I believe that it would be the first to say that Rover must deserve the continued increase in market share.
In expressing my gratitude to noble Lords for their appreciation of the significance of this Statement, clearly this matter is of importance not only to the Longbridge plant and the West Midlands but the country as a whole. If the noble Lord, Lord Razzall, wants to extend it to cover the exchange rate I suggest that he reads the Chancellor of the Exchequer's Meade Lecture at the London School of Economics last night.
Lord Clinton-Davis: My Lords, does the Minister agree, first, that the noble Lord, Lord Mackay of Ardbrecknish, is far more amenable to reason than his counterpart in the other place who expressed indifference to the idea that Rover should be saved in this way, albeit temporarily? Secondly, does my noble friend agree that Rover-Phoenix requires considerable support from either a British or foreign car manufacturer and cannot do it on its own? Therefore, that is a substantial reason for intensifying the search for a partner in the enterprise that Rover-Phoenix is undertaking at the present time. Can the Minister give an assurance that Rover-Phoenix is presently engaged in that search?
Lord McIntosh of Haringey: My Lords, I am not aware of what the Opposition spokesman said in another place in response to the Statement. At the time I was rather stuck to my desk here. I read a report of her response to this matter on BBC News 24 at 9.30 this morning. On the whole, the response was reasonably welcoming. She said that a good number of people would be relieved and that applications for funding would receive support. She confirmed, as we all agree, that there must be a viable business plan for the future.
In that respect I very much agree with the observations of my noble friend about the future. Perhaps this refers back to one point raised by the noble Lord, Lord Mackay. Mr Towers has said that the long-term future of Rover depends on
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collaboration and he will pursue that route in his long-term planning. I believe that that confirms the remarks of both my noble friend and the noble Lord, Lord Mackay, and the Government welcome it.
The Lord Bishop of Oxford: My Lords, obviously this is very good news. The agreement is a brave one. The new Rover 75 is a superb car and deserves to sell well not only in this country but abroad. I have one concern about Cowley. Longbridge has been mentioned a number of times. However, I am led to believe that production of the new Rover 75 as well as the old Mini will switch from Cowley to Longbridge. Cowley has been crucial to the economy of Oxford for many decades. Is the Minister able to share any information about the position of Cowley under 'the new Phoenix consortium?
Lord McIntosh of Haringey: My Lords, I hope that I am able to reassure the right reverend Prelate. It is true that Rover 75 production will move from Cowley to Longbridge. On the other hand, BMW has said that it will develop the new Mini at the Cowley site which it continues to own. I understand that that will continue to occupy the Cowley site and there will be no redundancies there.
Lord Naseby: My Lords, as I understood the position this morning, the £200 million from the American bank was subject to due diligence. First, is the Minister able to clarify whether or not that major restriction has been waived? Secondly, I understand that the £158 million and £129 million for the task force have nothing to do with Europe. Is the Minister able to confirm that none of the money that is to go to the new consortium requires approval by Europe?
Lord McIntosh of Haringey: My Lords, in response to the first question, I am not aware of any clue diligence requirement by any bank. I do not believe that such details have been made public. As far as I am aware, they have not been made available to the Government. The noble Lord may be better informed than I am on that matter. As to the £158 million and £129 million, I confirm that little, if any, of the £129 million which is to go to the task force for regeneration in the West Midlands is in any way affected by the European Commission or requires approval by it. As to any money that may go to Rover, Mr Towers and the Phoenix consortium have not asked for any state aid for Rover and none has been offered.
Baroness Crawley: My Lords, as someone who represented Longbridge as a Member of the European Parliament for 15 years until June 1999, I should like to add my congratulations to the Government, to Phoenix, the trade unions at Longbridge, the Government Office of the West Midlands and those who are very much involved in the task force. If ever an RDA chairman had a baptism of fire, it is Alex Stephenson as head of the task force. Perhaps the Minister is able to give a little more detail about the way in which the £129 million will assist the priorities

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of the task force. My noble friend referred to retraining. However, I am aware that the task force wants to diversify the manufacturing base of the West Midlands and attract new investment into that area as well as retrain any workers at Longbridge who are made redundant. I suspect that tonight workers at Longbridge will have more than a little sherry.
Lord McIntosh of Haringey: My Lords, I am grateful for my noble friend's contribution. She asked specifically about the allocation of task force money. The report of the task produced last month set out in some detail the proposed allocation of that money under various heads: skills training, development of sites and so on. I am sure that in the light of the new announcement, which means that there are going to be many fewer direct or indirect job losses than were feared, the task force will be reconsidering its priorities and the way in which it wishes to use the money. The good news is likely to be that because less will have to go on "fire fighting", more will be available for the longer-term development of manufacturing capacity and manufacturing employment in the West Midlands. I think my noble friend and the Government must await the task force's review of its own recommendations.
Lord Islwyn: My Lords, will the Minister appreciate that this agreement will be particularly welcome in the British steel industry, which is a major basic supplier to Rover? There have been ugly rumours in recent weeks and months about the future of certain steel plants in this country. Would he further consider the fact that, prior to the BMW takeover, Rover had a very useful agreement with the Japanese company Honda? Does he feel that it would be a good idea if this connection could be resumed?
Lord McIntosh of Haringey: My Lords, on my noble friend's first point, yes indeed, I am well aware that there will be much relief in the British steel industry. In particular, although he did not name it, Llanwern will be very much relieved that its sales to Longbridge will continue. It is an important contract for it. It will be important to see that the contract continues and it must also be important to the continued success of Llanwern.
As to the issue of co-operation or joint ventures with Honda, or indeed others, I can only repeat what I said in response to the noble Lord, Lord Mackay: that Mr Towers and the consortium have made it clear that they do see their future, among other things, in joint ventures. Those may well include Honda, but I do not know what their specific plans are.
Lord Shore of Stepney: My Lords, this is certainly welcome news but the big question now, as I am sure my noble friend will agree, is whether this is a temporary reprieve or really a new lease of life. I hope very much, as he does, that it will be the latter. However, there are two points which I am sure must puzzle others as well as myself. The BMW company
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was running at a loss of £700 million a year in that plant. That was last year's figure. What new factor has arisen that really seriously challenges that appallingly heavy loss figure? Secondly, because it is such a relevant factor, what advice, guidance or assurance were ministers and the Chancellor able to give the new company about the exchange rate between sterling and the euro?
Lord McIntosh of Haringey: My Lords, I think I made it clear in my response to the noble Lord, Lord Razzall, that as far as I know no assurances have been given to Mr Towers or the new consortium about the exchange rate. I am sure that my noble friend will have read the Chancellor's statement—I know he does his homework—and he will have seen that the Chancellor takes a very realistic view of the effect of the exchange rate on manufacturing industry. He is aware of the problems that arise from the strength of the pound or the weakness of the euro, according to which way round you choose to put it.
Of course it is true that in a sense nothing has changed. There is still over-capacity in the car industry as a whole, and Rover will have to fight its own corner in that respect. I think the best indication I can give to my noble friend that it is more likely to be a successful operation than has been the case in the past is that both the Phoenix consortium and BMW have said they believe that this is a winning solution and can be made to succeed.

Financial Services and Markets Bill
4.44 p.m.
Further consideration of amendments on Report resumed.
Lord Joffemoved Amendment No. 151A:
After Clause 135, insert the following new clause—
LONG-TERM INSURANCE BUSINESS RULES: REPRESENTATION OF POLICYHOLDERS
(" . The Authority shall make rules requiring an authorised person who is a body corporate who has permission to carry on regulated long-term insurance business to secure that the composition of the body's Board of Directors is such as to give a fair degree of representation to with-profit policyholders.").
The noble Lord said: My Lords, in moving this amendment I have to declare an interest in that my family and I are with-profit policyholders in proprietary life assurance companies. The purpose of the amendment is the protection of with-profit policyholders, who currently have no representation on the boards of life assurance companies. I raised this issue at Committee stage and the noble Lord the Minister has been kind enough to meet me and write to me outlining the Government's approach. However, I still cannot feel that with-profit policyholders have adequate protection, and I should like to pursue the matter further.
Without troubling your Lordships at too great length, let me just briefly outline the cause of my concern. From time to time the directors of life

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assurance companies are faced with conflicts of interest as between shareholders and policyholders. In such cases the directors, who are accountable to the shareholders who elect them, will tend to concern themselves with the best interests of shareholders rather than of policyholders, who have nobody to represent their interests.
As I did with my previous amendment, I will illustrate this type of conflict by reference to the Prudential, which is the largest life assurance company in the country, repeating that in so doing I am not suggesting that the Prudential acts differently from some other companies; nor am I seeking to personally impugn any of its directors. The Prudential board was recently faced with the decision of how to deal with the £2 billion compensation for losses arising from the mis-selling of personal pensions by salespeople whom the company had failed to properly train or control.
The company had two options. The first one was for the board to accept responsibility for the mis-selling and to write off the losses against shareholder profits. That would have wiped out entirely its profits for about two years which, to put it mildly, would not have been an attractive strategy to report to shareholders. It was, however, an option followed by at least one other with-profits company. The other option was simply to write off the losses against the orphan estate, which consists of surplus assets, the ownership of which is unclear as between shareholders and policyholders.
Faced with this very clear conflict, the board adopted the orphan estate option, with the consent of the DTI. In making this decision there was of course no one at hoard level to argue the case for policyholders and their interests. Had there been such representation, just some of the questions which would surely have been posed would have included the following. Was the board not responsible for the losses? Should not the shareholders, having elected the board, bear the losses? How could the chief executive of the Prudential for several years aggressively deny that this massive mis-selling had taken place? Why had the D'TI and, more recently the Treasury, not followed the agreed practice of consulting the policyholders before agreeing to the orphan estate being used for this purpose?
They might also have asked whether the reasonable expectations of Prudential policyholders had been met and whether the company's affairs had been managed ethically and competently. The Institute of Actuaries in 1993 had defined that as a key part of the primary expectation of policyholders. Finally, they might have asked: how could the Prudential, at a time when it was writing off a loss of £2 billion, for which the board was accountable, justify to policyholders reducing their balances, yet at the same time increasing dividends to shareholders?
It is not just the losses arising from the mis-selling of personal pensions which the Prudential policyholders would wish to query at board level. At the moment the Prudential is selling very large volumes of with-profits, single-premium bonds and paying extravagant commissions at a rate of up to 6 or 7 per cent on the
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bonds. It is the view of some actuaries that these sales enable the Prudential to give shareholders indirect access to the orphan estate and that in time the orphan estate will be eroded in order to maintain bonuses on these bonds. If there were directors elected by policyholders who would be expected to represent the interests of both shareholders and policyholders, they would want to question the unlimited marketing of such bonds and whether, if such extravagant commissions were not paid in order to buy business, policyholder bonuses might be higher.
I should like to round off the illustration of potential conflicts faced by the Prudential board by reference to what is left of the Prudential's orphan estate after the £2 billion depletion. Here we know that the Prudential is engaged in discussions with the Treasury about the orphan estate's attribution as between shareholders and policyholders, claiming that the vast majority of the orphan assets has come from shareholders. These discussions have been proceeding in great secrecy For approximately four years, but shareholders are denied any information whatsoever on the grounds that it is price sensitive information. If policyholder elected directors were present at board meetings, they would have brought pressure on the board to clarify to policyholders within a reasonable period what its intentions are so that their interests could be protected. They would also question whether the information is really price sensitive and for how long the defence of price sensitivity can be used as a means of avoiding the disclosure of essential information to policyholders. The Minister's views on this price sensitivity issue would be greatly valued.
I submit that there is a clear case for directors elected by policyholders on the boards of life assurance companies. The examples I have illustrated are not isolated cases affecting a handful of policyholders. Industry-wide we are talking about £20 billion of orphan estates and the best interests of millions of policyholders.
There is an obvious and recent precedent for my amendment. The Pensions Act 1995 provides that members of pension schemes are entitled to nominate one-third of the boards of their pension funds. During the debate relating to these issues the opposition, now the Government, argued for even greater member representation—50 per cent. Additionally, in the draft regulations recently published on stakeholder pensions, specific limitations are proposed on with-profit funds which are to be ring-fenced and which prevent any transfers to shareholders other than clearly stipulated maximum costs. I suggest that it is self-evident that with-profit policyholders—they include millions of personal pension investors— require similar protection, particularly in the light of the conduct of life assurance companies in the recent past.
Finally, I should like to put a question to the Minister. Does he accept that with-profit policyholders need protection; and how does he

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distinguish the case for protecting the interests of with-profit policyholders from that of protecting members of pension schemes and stakeholder pension members in the way described? I beg to move.
Lord Newby: My Lords, perhaps I may speak on behalf of the noble Lord, Lord Phillips of Sudbury, who has to chair a meeting.
The key question the amendment raises is how to ensure that the rights and interests of with-profit policyholders are dealt with. It is an extremely serious issue, as the noble Lord, Lord Joffe, made clear, which has not been dealt with adequately by many market participants up to this point. I suspect that it is easier to deal with such representation on the board of a mutual than a plc without opening up a wide range of other groups which might be represented on the board of a plc. I am full-square behind the amendment. It is a serious issue which is not adequately addressed in all cases under current regulation. I look forward to hearing the Minister's response on how the Government might strengthen the position of with-profit policyholders in future.
Lord Naseby: My Lords, first, I declare an interest as chairman of a friendly society and a member of the Association of Friendly Societies.
The key point of the debate is the difference between proprietary companies and mutuals. After all, the leading life with-profit policy organisation in this country is a mutual. While past performance is no guidance for future performance, if one looks at the performance of the top 10 with-profits life companies one will find that something like eight of them are mutuals. The consumer choice is there in the first place. The consumer chooses whether to invest in a with-profit policy in a proprietary company in the full knowledge that the success of that company will be shared between the with-profits holder and the shareholder. If they want to benefit from the whole of the profit, they should join those of us who are in the mutual movement.
Lord McIntosh of Haringey: My Lords, I am very tempted by the noble Lord, Lord Naseby, as one who has been—I have declared this interest to the House on another occasion—a with-profit policyholder in two mutual companies both of which decided to demutualise, against my vote. I have my own feelings on this matter. The Government's view is one which I think would be shared by the noble Lord, Lord Naseby: that there is a role for more than one form of governance in the insurance industry; and that there is a role for mutuals as well as proprietary companies. However, perhaps we are straying beyond the confines of the Bill.
We had a useful debate in Committee on the subject of the orphan estates of long-term insurers. In responding to that debate, I was able to give some assurances about the arrangements for the regulation of relevant business now under the Insurance Companies Act 1982, and how the FSA would be able
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to continue to maintain similar levels of protection using the powers conferred on the FSA by the Bill. Therefore I shall not rehearse the arguments that I put forward in Committee, nor the detail of the arrangements I described.
It was clear from our debate that a major concern was the transparency of the arrangements and the information provided to with-profits policyholders. The noble Lord, Lord Joffe, referred to that again in describing the case of the Prudential. Greater transparency is something that the FSA will be able to require using its powers under the Bill. It would be premature for me or for the FSA to say that it will do so. The FSA must come up with proposals for rules and consult on them, but I can say that it is something the FSA is considering.
Before I respond to the amendment, I should like to pick up a couple of points made by the noble Lord, Lord Joffe. I express my gratitude to him for sending a copy of his argument to me in advance. It is certainly the case that information is available to support the information sent to policyholders in the annual bonus notices. I may have given another impression at Committee stage. It may have been possible to construe my response to imply that the Treasury regulations require that information be sent to policyholders. If that were the case, I apologise. Let me explain my point so that the position is clear.
The Treasury requires a bonus notice to be given but it does not specify the information that has to be provided. However, substantial information must be published annually by insurance companies: their annual report and accounts; the regulatory return (it is still often called the DTI return); and the report of the appointed actuary. That information can be obtained from the company or Companies House.
The noble Lord, Lord Joffe, spoke in some detail about the particular company, the Pru. Since we are debating a Bill, I do not think that I should discuss the rights and wrongs of anything done by a specific company. However, perhaps I may say a word about where the Pru has got to in its proposals. I understand that it is proposing to make an attribution of the orphan estate from which the Pru would be able to make compensation claims. The appropriate share would go to policyholders.
As regards further distributions, the fact is that the Pru is not yet at the consultation stage. It would first need to obtain the approval of the regulator for the overall plan. There is not much point consulting if the FSA will reject the plan after consultation. I do not know whether that helps the noble Lord, Lord Joffe, but I took seriously his point about negotiations taking place for four years with nothing being said to with-profits policyholders.
The issue of pensions mis-selling goes wider than the Pru and the Government sought to address it soon after coming to office. Your Lordships will recall Mrs Liddell, when she held the post, severely calling insurance companies to account for pensions misselling and she demanded rectification.

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There is a relationship between pensions mis-selling and orphan estates, but the position varies between firms. The matter must be considered on a case-by-case basis. However, as the matter has been raised I want to trail arrangements which will come later in today's proceedings. Perhaps I may address my comments in particular to my noble friend Lady Turner who expressed concern about the matter.
Amendments Nos. 212 and 222 provide a framework for reviews of past business if something along the lines of pensions mis-selling were to happen again. That is for a later debate, but having regard to the prominence given to the issue by the noble Lord, Lord Joffe, that may be helpful.
The subject of the amendment, while it also relates to the question of with-profits life insurance policies, is different from the issue debated in Committee. It seeks to ensure that the interests of the policyholders may be properly represented on the board of the company concerned.
It is not true to say that the board considers only the interests of the shareholders and that no one is available to represent the interests of policyholders. The regulator will for the most part be there to ensure that lie represents the interests of the proverbial man on the Clapham omnibus and to ensure that he is properly taken into account by the company.
The amendment raises some technical difficulties because in our view it would confer a power on the authority which would not be appropriate. It goes way beyond matters of regulation and is more a matter of corporate governance.
I accept that Part V of the Bill gives the FSA certain powers in relation to the membership of the boards of authorised firms, which will allow the FSA to intervene in specific cases in order to protect the interests of policyholders: for example, to prevent a person who is unfit to be a director of an authorised firm from holding such a position; or to ensure that the board has an appropriate balance of expertise and experience and of executive and non-executive members. But there is a world of difference between an intervention power of that kind and a statutory prescription that a particular category of stakeholder should always be represented on the board.
Therefore, that is not a power which I would wish to see conferred on the FSA; nor do I believe that it is truly a financial regulatory issue. Therefore, it would be outside the scope of the Bill. Against that, I accept that the arrangements are not entirely without precedent. The Pensions Act 1995 makes arrangements allowing pensioners to be trustees of a pension fund. But in that case the assets are held in trust for pensioners, so the case for pensioner directors is stronger.
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Therefore, I would not rule out the possibility of a provision on the statute book that would have the effect of requiring policyholder representation on the board of a company whose business included with-profits long-term insurance. However, it seems to me that that is a question best considered in the wider context of the company law review and not financial regulation.
On the basis that the issue will be considered in the context of the company law review currently being carried out by the Department of Trade and Industry, I regret that I invite the noble Lord, Lord Joffe, to withdraw his amendment.
5 p.m.
Lord Joffe: My Lords, I am grateful to the Minister for his careful consideration of the amendment. As regards the distinction between mutual and with-profits companies, I fear that the mutuals are fast disappearing and that choice will soon be very limited. But that is not the main thrust of my case.
I am encouraged by the Minister's comments on the company law review and his clear acceptance that there is some merit in the points raised, in particular transparency from the point of view of policyholders. Having regard to that and the urgent need to get the Bill on the statute book in as short a time as possible, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 140 [Endorsement of codes etc. issued by other bodies]:
Lord McIntosh of Haringeymoved Amendment No. 152:
Page 68, line 24, leave out ("subsection (4) applies") and insert ("subsections (3) and (4) apply").
The noble Lord said: My Lords, Amendment No, 152 makes a minor yet necessary consequential change to Clause 140. As the House will recall, subsection (3) was inserted in Committee to enable the authority to exercise its powers under Part IV (permission to carry on regulated activities) or Clause 65 (disciplinary powers with regard to approved persons) at the request of the take-over panel. That will specifically enable the panel to invoke the authority's disciplinary powers with regard to approved persons in addition to its powers referred to in subsection (4); namely, Parts XIII, XIV and XXV. This further amendment is consequential on the introduction of subsection {3) and I commend it to the House. I beg to move.
Lord Kingsland: My Lords, the clause refers to the power of the authority to endorse rules made by the take-overs and mergers panel. The amendment is to subsection (6) and makes clear that subsection (3) applies to the rules, as amended from time to time by the panel, as well as subsection (4). Both allow the authority to take enforcement action at the request of the panel and we are happy with the amendment.
On Question, amendment agreed to.
Clause 142 [Financial promotion rules]:
Lord McIntosh of Haringeymoved Amendment No. 153:
Page 69, line 33, leave out from ("communication") to end of line 34 and insert ("by them, or their approval of the communication by others, of invitations or inducements—

(a) to engage in investment activity; or

(b) to participate in a collective investment scheme.").

The noble Lord said: My Lords, in moving Amendment No. 153, I shall speak also to Amendments Nos. 154, 155 and 167. Clause 142 confers the power on the authority to make rules applying to authorised persons in relation to the regulation of financial promotions under Clauses 19(1) and 234(1). Clause 263, to which Amendment No. 167 applies, empowers the authority to suspend the promotion of an EEA scheme to the public where it appears that the operator has contravened the authority's financial promotion rules.
Amendments Nos. 153, 154 and 155 are technical amendments to Clause 142 restricting the application of the rule-making power set out in this clause. Amendment No. 153 to subsection (1) and Amendment No. 154 to subsection (2) are drafting changes which pave the way for the substantive Amendment No. 155.
Amendment No. 155 inserts a new subsection after subsection (2), ensuring that the authority may only regulate communications made by authorised persons which, if they were made by unauthorised persons without the approval of an authorised person, would contravene Clause 19(1), and communications which may be made by authorised persons without convening Clause 234(1).
The effect of this is that an authorised person will not be subject to rules made under the clause when he makes a communication which falls outside the scope of the controls applying to unauthorised persons imposed by Clauses 19 and 234. The Government are also proposing that a technical amendment—Amendment No. 167—be made to Clause 263(1) in order to delete the express reference to invitations and inducements,
"of a kind mentioned in Section 234(1)",
in that subsection. Given that authorised persons cannot make the kind of invitations or inducements referred to, the deleted words are unnecessary and have therefore been removed. I commend all the amendments to the House. I beg to move.
Lord Kingsland: My Lords, our understanding is that Amendments Nos. 153 to 155, which affect Clause 142, relate to the authority's power to impose financial promotion rules on FISMA-authorised firms and are technical only. Therefore, they are quite acceptable.
So far as concerns Amendment No. 167, as the Minister explained, Clause 263 relates to the power of the authority to give a direction under that clause. Even though the fund is recognised, and so for
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marketing purposes is treated as an authorised unit trust and therefore outside the marketing restrictions in Clause 234(1), that power enables the authority to require that the restrictions none the less apply. The authority can do that only if the operator of the recognised scheme—typically the manager of a non-UK open-ended investment company—has failed to comply with the FSA's financial promotion rules.
We have only one query relating to this issue. The amendment seems to provide that the invitation or inducement covers the redemption of shares as well as their promotion. The Government may like to consider that point before Third Reading.
Lord McIntosh of Haringey: My Lords, I shall be very glad to do that.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendments Nos. 154 and 155:
Page 69, line 37, leave out paragraph (b).
Page 69, line 38, at end insert—
("( ) Subsection (1) applies only to communications which—

(a) if made by a person other than an authorised person, without the approval of an authorised person, would contravene section 19(1);

(b) may be made by an authorised person without contravening section 234(1).

( ) "Engage in investment activity" has the same meaning as in section 19.").
On Question, amendments agreed to.
5.15 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 156:
After Clause 143, insert the following new clause—
CONTROL OF INFORMATION

(".—(1) The Authority may make rules ("control of information rules") requiring an authorised person ("A") to withhold information from a person ("B") for or with whom he does business in the course of carrying on any regulated or other activity.

(2) Control of information rules may—

(a) require the withholding of information which A would otherwise have a legal obligation to disclose to B;

(b) require A to restrict or prevent the passing of information within his business.

(3) Subsection (1) applies only in relation to information obtained from a person other than B in the course of the carrying on by A of any activity, whether it was obtained by A, by an approved person or by any other person.

(4) "Approved person" has the same meaning as in section 63.").

The noble Lord said: My Lords, in moving Amendment No. 156. I shall speak also to government Amendments Nos. 157 and 218. I shall respond to anything that is said about opposition Amendment No. 157VA in due course when the amendment has been spoken to.
Amendment No. 156 inserts a new clause after Clause 143 giving the FSA the power to make rules which require an authorised firm to operate Chinese

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walls restricting or preventing the flow of information within a firm and dealing with the disclosure of certain information. These are called the "Chinese walls rules", which is not the easiest thing to say!
Chinese walls are simply established arrangements in the form of procedures, systems, management and physical location which act as barriers within a firm to ensure that information which is generated within one part of the firm or obtained from a client in one part of the firm does not penetrate another part of the firm. They are important for a number of reasons. They provide a mechanism for authorised firms to function as multi-disciplinary operations. Of course, a major point of the Bill is that it responds to the fact that much financial service activity is now multi-disciplinary.
As the Law Commission indicated in its 1995 paper, Fiduciary Duties and Regulatory Rules:
"Chinese walls are widely used in organisations which provide financial services … they are essential if the industry is to operate in its present form with multi-functional investment houses performing a wide range of services".
Those rules will continue to protect the interests of the clients of such a firm by ensuring that information which relates to a particular person in relation to a particular activity does not reach another part of the firm. They also protect the firms themselves, establishing a firm regulatory framework within which the firm must control the flows of information, both internally and externally.
The other two amendments in the group are consequential changes. Amendment No. 157 allows the authority to modify or waive control of information rules provided that the procedure set out in Clause 144 is followed; that is, rules made under the proposed new clause are treated in the same way as other rules referred to in Clause 144(1). Amendment No. 218 simply provides a definition in Clause 407 of control of information rules.
I should add that, in response to concerns raised by the City Liaison Group, the Government are currently reviewing whether adjustments to this clause would be desirable. We aim to report back on this issue at Third Reacting if, indeed, it is considered that they would be desirable. I beg to move.
Lord Kingsland: My Lords, I may take a little while both in responding to the government amendment and in speaking to my own, for which I apologise in advance.
Amendment No. 156 is headed "Control of information" but, as the Minister said, should really be headed "Chinese walls". Chinese walls are of great help to investment firms because, on the one hand they give the advantages of being in a single corporate entity but, on the other, allow the separate parts of that entity to be treated as different in law. As your Lordships are well aware, the purpose of that is to ensure that knowledge in one part of the firm, behind the Chinese wall, should not infect the other part of the firm in front of the Chinese wall.
That is crucial; because the walls protect the firm from having to use information that it receives confidentially from one client for the benefit of
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another. They help firms to deal with conflicts of interest and the strict application of fiduciary duties by which all advisers, brokers and investment managers are bound. They also protect the firm against charges of insider dealing and, I trust, market abuse. In addition, they protect the firm from contravening FSA rules which apply when it knowingly does something if the individuals that know are behind the Chinese wall and what is done is done by people m front of the Chinese wall without any cross-contamination.
As I understand it, the Chinese wall is acceptable to regulators and included in the authority's core conduct of business rules. Yet the government amendment does not provide for it at all. The amendment merely empowers the authority to make rules which require any authorised person to withhold information. That would impose an intolerable burden on small firms where there is no effective Chinese wall because none can be constructed; staff will have to segregate information in their minds and not mention it to employees who work alongside them.
So far as I am aware, the authority does not have any such rule at the moment; nor, indeed, do the SROs. Indeed, I cannot believe that the authority would want to introduce such a rule. The current provision for Chinese walls is in Section 48(2)(h) of the Financial Services Act, which empowers the authority to make rules which either enable or require information to be withheld. At the very least, Amendment No. 156 should cover both aspects.
The role of Chinese walls has, of course, changed quite a lot since the Financial Services Act was passed in 1986. In particular, the authority's rules must now cover the right not to use information held by a firm. As a matter of agency law, any information which a firm has about one client, at least arguably, is required to be used also for the benefit of all other clients. In other words, there is a requirement to abuse the inside information. I give just one example. If a firm is about to launch a bid on behalf of one client, it knows that the shares in the target company will go up in value. Therefore, it is required by agency law to buy shares in the target company for all its other clients. Clearly, that is an intolerable situation. Moreover, it is classifiable as illegal insider dealing.
The amendment must be expanded to cover permitting or requiring not only the withholding of controlled information but also the use of that information. The rules must provide that a firm is not required to use information held on the other side of the Chinese wall. That reflects the existing practice of investment banks and stockholders, and probably everyone else as well. Normally there are provisions in the client agreement which allow that to happen. However, it would be extremely helpful and perhaps—I go further—essential that the authority's rules should also allow the non-use of information held behind the Chinese wall.
Our Amendment No. 157VA seeks to solve these problems. This new clause is concerned with the position of authorised persons who comply with control of information rules as defined in government

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Amendment No. 156 but who also owe their customers fiduciary duties to make disclosure of information in the possession of the authorised person. Control of information rules recognise the concept of Chinese walls which are, as we have already noted, a common feature of the financial services business.
For present purposes, the starting point is April 1992 when the Law Commission produced a long and detailed consultation paper on the topic of fiduciary duties and regulatory rules. The paper considered the impact on fiduciary duties of compliance with regulatory rules, particularly in the context of the regulatory regime established under the Financial Services Act 1986.
One of the matters considered was whether compliance with regulatory rules, which permitted the establishment of Chinese walls, ousted the usual fiduciary duties of disclosure and avoidance of conflicts of interest which would normally have applied.
The Law Commission's consultation paper was followed in December 1995 with its report on the consultation. The Law Commission concluded on the issue of Chinese walls at paragraph 16.6 that:
"We believe that it is essential to remove any doubts, however tenuous, about the legal efficacy of the practice of withholding information by means of a Chinese wall which complies with the regulatory requirements as a method of managing conflicts of interest and duty. The Chinese wall is an essential device for the operation of the modern financial conglomerate; and the determination of its effectiveness should not be left to the uncertainties of litigation".
The Law Commission's recommendation for resolving the doubt was that:
"There should be legislative provision that a firm shall be protected from liability where (i) information is withheld from a customer (or is not available for the customer's use) pursuant to a Chinese wall arrangement which complies with the regulatory requirements; or (ii) a firm places itself in a position where its own interest on one side of a Chinese wall which fulfils regulatory requirements conflicts with a duty owed to the customer of a department on the other side of the Chinese wall, and as a result of the Chinese wall neither department knows of the firm's conflicting interest or (iii) a firm owes conflicting duties to the customers of different departments on different sides of a Chinese wall which fulfils regulatory requirements, and as a result of the Chinese wall neither department is aware of the conflict".
The Law Commission also recommended that what constitutes a Chinese wall for the purposes of the legislative provision should be laid down by the authority pursuant to delegated powers under Section 42H of the Financial Services Act 1986. That is effectively the same as the power of the authority to make control of information rules under the new clause introduced by the Government's Amendment No. 156.
The Law Commission made a number of other recommendations concerning Chinese walls and included in its report a draft clause which it was intended should be incorporated in the Financial Services Act which met the requirements of its legislative approach to dealing with the matter. In July 1998, when the Treasury issued the draft of the
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Financial Services and Markets Bill for consultation, the Treasury's overview of financial services regulatory reform, it stated at paragraph 5.11:
"We intend that the Bill as introduced into Parliament will ensure that compliance with the FSA rules relating to Chinese walls which manage or avoid conflicts of interest and help prevent insider dealing will protect a firm not only against criminal liability but also against civil action for breach of duty. This will mean that firms are not put at risk of legal challenge where they comply with these important regulatory requirements".
So clearly, in July 1998, the Treasury thought that a provision in the Bill to deal with Chinese walls was necessary. Although the Government at this late stage have tabled an amendment providing for control of information rules it is, if I may say so, of considerable surprise that, given the background to the matter, the Government do not propose to implement the Law Commission's recommendation by including in the Bill an appropriate provision. That is despite the firm statement of intention to do so in the Treasury's consultation document on the draft Bill.
Our Amendment No. 157VA is a redraft of the Law Commission's draft clause set out in its report, amended to take into account the differences between the provisions of the Financial Services Act 1986 and the provisions of the Bill. It may not be perfect in every way but we should like to know why it is that the Government do not propose to table an amendment of their own to reflect the Law Commission's proposal. Has something happened to change the Treasury's thinking on the matter? Do they think the Law Commission is wrong and, if so, why is the Law Commission wrong? A huge amount of work has been done by the Law Commission on this issue and a long consultation process has occurred. In our judgment, it would be most unfortunate if this opportunity for dealing with the issue, one way or another, was not taken.
Finally, I turn to a question of drafting in relation to the Government's amendment. It provides that its provisions should apply only in relation to information obtained from a person other than the client. However, corporate finance advisers and private equity firms would dream up their own ideas about prospective deals and would work on them accordingly. That information would not be obtained from anyone else and, therefore, the Chinese wall provisions will not apply. The amendment deals with information about clients but not information about deals. Those are my submissions.
Lord McIntosh of Haringey: My Lords, it is clear from what the noble Lord, Lord Kingsland, said that we are both trying to do the same thing but we are trying to do it in rather different ways. We are both trying to ensure that there is proper protection for an enforcement of Chinese walls and I was perhaps unwise enough to call the Law Commission report of 1995 into aid in the context of saying how important Chinese walls are. That shows that we agree about that at any rate.
So the noble Lord is now saying that our amendments are unsatisfactory; that they do not make comparable provision with Section 48(2)(h) of the

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Financial Services Act 1986 and he is asking me what has changed since the Law Commission produced its report in 1995 and since we indicated at the beginning of the consultation process on this Bill that we wished to introduce amendments to give effect to that.
I concentrate on the noble Lord's amendment because it makes the position clear as to why and how things have indeed changed.
Amendment No 157VA proposes that a person who is subject to control of information rules incurs no liability to a person for or with whom he does business in the course of carrying out any regulated activity in the circumstances set out in subsection (1) of the proposed new clause. We do not believe that amendment is necessary because we do not think that a person who has acted in accordance with statutory rules which require him to act in a particular way will be liable to a civil suit.
The Law Commission produced a report in 1995 arguing that there should be an express defence in legislation for any civil liability incurred by an authorised person who has acted in conformity with FSA "Chinese walls" rules. We undertook to address that concern in the consultation document published with the draft Bill to which the noble Lord, Lord Kingsland, referred. On balance, however, the Government believe that express provision for a defence from civil action is not necessary.
Since the Law Commission reported, and, indeed, since the consultation document published with the draft Bill, there have been developments in case law which, although not directly dealing with financial services firms, did address the issue of civil liability and procedures for dealing with conflicts of interest. The most important case here is the 1999 case of Prince Jefri Bolkiah v KPMG.
In the light of the statements of the Judicial Committee of this House in this case, it is the Government's firm belief that the courts would be unlikely to hold that someone could successfully sue an authorised person for breach of fiduciary duties where the authorised person has complied with FSA rules, which, of course, are made under Parliament's delegated statutory powers.
The Law Commission and many in the City Liaison Group, which includes the representatives of several City law firms, tend to agree with us that an explicit defence is not necessary here. In addition, there is concern that express provision could cast doubt on the current position in relation to rules made under the Financial Services Act 1986. Such a defence could also have implications in relation to the effect of compliance in other areas with rules made by the FSA under its statutory powers. The new clause has been recast so that rules will require an authorised firm to do various things.
Where an authorised person has no choice other than to comply with statutory rules, he cannot be subject to civil liability for anything that he does in accordance with those rules. Therefore, we resist the Opposition amendment.
On Question, amendment agreed to
5.30 p.m.
Clause 144 [Modification or waiver of rules]:
The Deputy Chairman of Committees (Viscount Allenby of Megiddo): My Lords, before calling Amendment No. 157, I must point out that there is an error in the Marshalled List. It should read:
"Page 70, line 3, at end insert".
Lord McIntosh of Haringeymoved Amendment No. 157:
Page 70, line 3, at end insert—
("( ) control of information rules;").
On Question, amendment agreed to.
Lord Kingslandmoved Amendment No. 157KA:
Page 70, line 16, at end insert ("and must be determined by the Authority before the end of the period of 30 days beginning with the date on which the application is received").
The noble Lord said: Clause 144 allows the authority in particular circumstances to direct that all or any of the rules set out in subsection (1) are not to apply to an authorised person or will apply to an authorised person with such modifications as the authority may direct.
That appears to be a useful provision which provides flexibility for the authority to modify or waive rules. However, subsection (4) reduces that flexibility considerably. In particular, the authority cannot use the power to waive or modify rules unless it is satisfied that compliance with the rules would be unduly burdensome or would not achieve the purposes for which the rules were made.
It seems to us that the circumstances in which the authority will be able to use its power to give directions under this clause will be rare. That is a shame. We were promised a flexible regulation, but being realistic, subsection (4) removes the benefit of flexibility that the clause could have provided. In Committee we tabled amendments with a view to increasing the authority's flexibility, but your Lordships will recall that our amendments were rejected.
The only amendment in this group that attempts to introduce a small element of increased flexibility is Amendment No. 157LA. That amends subsection (4)(a) by adding the words,
"or would be unlikely to".
Therefore, the authority could give a direction if it were satisfied that compliance with the relevant rules was unlikely to achieve the purposes for which the rules were made.
The other amendments concern the practical operation of the clause. We propose that, first, the authority should be obliged to determine applications under Clause 144 within 30 days; secondly, that the authority should be obliged when considering an application to take into account the nature of the authorised person's business and the person with whom the authorised person carries on or intends to carry on business; thirdly, that the FSA should be obliged to give an explanation of its decision if it

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decides not to give a direction; and fourthly, that the authority's power to revoke a direction already given should be subject to at least seven days, prior notice to the authorised person concerned unless the interests of consumers require otherwise.
Clause 153 is the important clause as it provides for the giving of guidance by the authority. Amendment No. 157WA deals with a relatively small but nevertheless important point. Under Clause 153(4)(c) the authority may make a charge for the giving of guidance irrespective of who requested the guidance.
We believe that for authorised persons and approved persons who are liable to be disciplined and who are liable to incur penalties if they breach the rules, it is wrong in principle that they should be charged for guidance on the rules. Such persons should be entitled to an explanation without charge.
Amendment No. 157XA would amend Clause 153 by providing that compliance by an authorised person of the FSA's guidance would not be treated as contravening the rules to which the guidance relates. If an authorised person, for example, seeks and obtains from the authority guidance on a particular rule, and acts in compliance with that guidance, he should not be treated as contravening the rule to which the guidance relates.
The Economic Secretary to the Treasury, the honourable Ms Melanie Johnson, in Committee in another place, said that she would be surprised if, in those circumstances, the authority itself would take disciplinary action against the authorised person if it proved to be the case that the authority's guidance was defective in some way or other. It would certainly be reasonable to expect that. However, our concern relates to Clause 146 under which a private person could still take action against the authorised person in the circumstances that I have described. That does not seem to us to be reasonable or to represent good regulation.
If authorised persons act in compliance with guidance, issued by the authority, they must be confident that they will not find themselves subject to actions for damages to private persons. The action for damages available to a private person under Clause 146 is subject to the defences and other incidents applying to actions for breach of statutory duty. Perhaps the Minister can tell the House whether an authorised person who, in good faith, acts in accordance with the authority's guidance would have such a defence. If such a defence is available, there can be no objection to the amount. If such a defence is not available, that confirms the need for the amendment. I beg to move.
Lord McIntosh of Haringey: My Lords, the first five of these amendments relate to Clause 144. I do not believe it was clear from listening to the noble Lord, Lord Kingsland, that Clause 144 is concerned with the power of the authority to waive or modify certain kinds of rules as set out in subsection (1). In other words, this is a clause that brings flexibility and realism
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to what may otherwise be a more rigid and threatening regime. All the amendments to Clause 144 ought to be seen in that light.
We are not happy with the amendments to Clause 144. On Amendment No. 157KA, the authority may not give a direction under Clause 144 unless it is satisfied that the various factors under subsection (4) have been met as well as the publication criteria under subsection (7).
Meeting all these requirements may involve the authority in a lengthy investigation, especially where the authorised person provides a wide range of financial services. Of course the authority will want to consider each application carefully in order to ensure that it reaches the right decision. For that reason, it cannot be sensible to bind the authority to determine all applications received under Clause 144 within the time-scale proposed in the amendment.
However, the authority has already stated in its September 1999 policy statement, The FSA's approach to giving guidance and waivers to firms, that it will develop,
"response standards to underpin the efficient operation of the waiver mechanism under the new legislation".
I hope that that will satisfy the noble Lord, Lord Kingsland.
Amendment No. 157LA, to which I believe the noble Lord, Lord Kingsland, attaches more importance, proposes to amend subsection (4)(a) so that the authority may not give a direction unless it is satisfied that compliance by the authorised person with the rules, or with the rules as unmodified, would be unduly burdensome or would not achieve, or would be unlikely to achieve, the purpose for which the rules were made. The "unlikely" element is introduced by the amendment.
We are certainly not keen on this amendment. If all that the authorised person has to do is to demonstrate that compliance with the rule would be unlikely to achieve the purpose for which the rule was made, there is a distinct risk that the authority may issue a waiver or modification where it later turns out that compliance with the rule did in fact achieve the purpose for which the rule was made. At the same time, it is unclear how "unlikely" would work. Who is to judge whether a rule would be unlikely to achieve the purpose for which it was made? Should it be the authority, the applicant, or is it to be judged objectively on the basis of what a reasonable man may think? If that is the case, it is not at all clear from the way in which the amendment has been drafted. I am sorry, but the amendment is defective.
Amendment No. 157MA will oblige the authority to take certain specified matters into account among other things, an authorised person's clients and business when it considers whether to issue a waiver or modify a rule. I said in Committee that, while the

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onus is on the applicant to show that the criteria set out in subsection (4) are met, the authority has already indicated in its policy statement, to which I have already referred, that,
"it will apply its general requirements in a way that allows them to be tailored to fit the circumstances of particular firms in accordance with its commitment to a flexible and differentiated risk-based approach".
That is in line with the statutory objectives set out in Part I of the Bill, specifically in Clause 5, under which the authority must have regard to the differing degrees of experience and expertise that different consumers may have in relation to different kinds of regulated activity.
Amendment No. 157NA proposes to impose a requirement on the authority to give reasons in writing to an applicant whose application for a waiver or modification has been rejected. We believe that this would involve excessive bureaucracy. Imposing an absolute obligation of this nature on the authority is counter-productive and may distract the authority from meeting its regulatory objectives.
The same is true of Amendment No. 157PA. The range of circumstances in which revocations may be required will be very different. We would expect that where it can, the authority would give notice of such a revocation in order to allow the firm to arrange its affairs accordingly. As with the amendment to which I have just spoken, we do not want an extra layer of bureaucratic controls that always require the authority to give reasons.
Of course there will be cases where it will be in the interests of consumers that fast action is taken. I see that that has been recognised in new subsection (9B). However, I do not see that we need to legislate about any of this since we shall be simply stating what we would expect to happen in practice anyway. I am afraid that we are not sympathetic to any of the amendments to Clause 144.
Perhaps I may turn to Amendment No. 157XA. That would have the effect, in Clause 153, that where an authorised person acts in compliance with guidance issued by the authority, he shall not be treated as contravening a rule to which such guidance relates,
"or as thereby contravening rules".
As a claim for breach of statutory duty cannot be brought by a third party unless a rule has been contravened, this will in fact disapply Clause 146 which is concerned with action for damages in cases where guidance has been issued by the authority and relied on by an authorised person.
As regards proceedings brought under the Bill, as long as a person has acted in compliance with current written guidance in circumstances contemplated by the guidance, the authority will not take regulatory action against him. That is confirmed by the FSA in its policy statement, The FSA's approach to giving guidance and waivers to firms. Similarly, with regard to the Bill's criminal sanctions, reliance on FSA guidance will serve as a ground for the due diligence defences under Clauses 22 and 23.
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However, the Government maintain their belief that reliance on FSA guidance should not be able to block an action for damages for breach of statutory duty, even where the guidance has been published and/or takes the form of general guidance. We must preserve the principle that third parties, in particular private consumers, should not be deprived of the opportunity for redress where they suffer loss at the hands of an authorised person as a result of that person's contravention of the rule. A consumer's potential for loss, we believe, remains unaffected by the publication of the guidance, especially where guidance merely provides an interpretation of the rule, rather than an interpretation of the conduct in relation to the rule.
The Government believe that guidance should continue to have an informal status which reflects what the word "guidance" means. Rendering guidance enforceable will have the effect of giving it the status of rules. The customer of the authorised person would have been deprived of his right of action even though a particular rule had in fact been broken. From that customer's point of view, it looks as though the guidance is given more weight than the law contained in the rule. Going down this track would have important adverse consequences for authorised persons. It would be possible to change the effect of the rule without going through the necessary consultation procedures. Furthermore, it may be that the authority, conscious of the enhanced formal status of guidance which would be conferred by this amendment, may be less inclined to issue guidance. This could impact heavily on authorised persons who may wish to rely on guidance in the authority's proceedings.
However, that is not to say that guidance is not important. A court, in adjudicating a claim for breach of statutory duty, will have regard to the defendant's reliance on general, published FSA guidance—although this will depend heavily on the circumstances of the case—in assessing liability or quantum of damages. It is highly relevant. I hope that that provides the noble Lord, Lord Kingsland, with some comfort and that he will not press the amendment. Perhaps I may also say that we have written to the City Liaison Group about this point.
Amendment No. 157WA proposes a new subsection to follow subsection (4)(c) in Clause 153 which empowers the authority to make a reasonable charge for guidance where that guidance has been given in response to a request made by any person. The amendment provides that subsection (4)(c) does not apply if the request is made by or on behalf of an authorised person or an approved person within the meaning of Clause 63(13).
Frankly, I do not understand this amendment. The subject of fees was raised in Committee in another place where the Opposition proposed the deletion of subsection (4)(c). As the Economic Secretary said at the time, it is clear from the authority's published policy statement, to which I have referred, that,
"individual guidance will continue to be given on a relatively informal basis and without charge".
I hope that this will persuade noble Lords that the amendment should not be pursued.

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I regret that I must be so negative about these amendments, but I am afraid that we shall not be able to accept any of them.
5.45 p.m.
Lord Kingsland: My Lords, I found the experience of listening to the words of the Minister on these amendments extremely distressing. I shall look very carefully at the response of the noble Lord to the amendments that we tabled to Clause 144 in the hope that I might glean something positive from what he said.
As far as Clause 153 is concerned, in particular Amendment No. 157XA, it was plain that the Minister's reaction was totally intransigent. This is a matter to which we are certain to return at Third Reading. At that point we shall seriously consider testing the opinion of the House.
The Minister is well aware that, in continuing to ensure that the City remains a creative part of the economy, it is absolutely crucial that the balance between sensible regulation, on the one hand, and a sufficient margin for enterprise on the other, is kept. In our view, the opinions that the Minister has expressed on guidance in relation to providing a safe harbour upset that balance. In those circumstances, it is a matter to which we shall return. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 157LA to 157PA not moved.]
Clause 147 [Limits on effect of contravening rules]:
Lord Kingslandmoved Amendment No. 157QA:
Page 71, line 39, leave out ("made by the Authority").
The noble Lord said: My Lords, in moving Amendment No. 157QA, I shall speak also to Amendments Nos. 172A, 173A, 174A, and 175A to 175C.
Amendment No. 157QA is a small amendment to Clause 147 and seeks to remove the words, "made by the Authority", which feature after the word "rule". The reason is simple. The word "rule" is defined by Clause 407(1) as,
"a rule made by the Authority under this Act".
Therefore, it would seem that the words, "made by the Authority" in Clause 147(1) are—dare I say it?—otiose.
Amendment No. 173A to Clause 322, seeks to insert the words,
"or retain with the consent of",
after the word "to" at page 171, line 37. As your Lordships are well aware, Part XX of the Bill deals with the provision of financial services by members of the profession. Clause 322 sets out the conditions which must be satisfied by a member of a profession if he is to avoid the general prohibition against carrying on regulated activities when not authorised to do so. If that exemption is to have some use, it must be possible to satisfy the conditions.
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Our concern relates to Clause 322(3) and the requirement that the person concerned,
"must not receive from a person other than his client any pecuniary reward or other advantage, for which he does not account to his client, arising out of his carrying on of any of the activities".
The words,
"any pecuniary reward or other advantage",
are very widely drawn and would cover virtually any benefit; for example, they could cover the payment of a person's bill by a third party. How will all that work in the context of partnerships, particularly large ones which carry on a wide range of services?
Amendment No. 173A is a small attempt to assist firms to be able to satisfy the condition in Clause 322(3) by providing that the condition can be satisfied if the client consents to the retention by the relevant person of the pecuniary reward or advantage.
Amendment No. 172A is a government amendment relating to the exemption in Part XX for members of regulated professions who are carrying on regulated activities which are incidental to the carrying on of professional services. The amendment, as we understand it, limits the exempt or regulated activities to activities exempted by Part XX, which is welcome.
Amendment No. 175A seeks to amend Clause 322. Here the Part XX exemption applies only if the regulated activities carried on by the professional are all exempted by Part XX. The amendment recognises that the professional may be an exempt person for other reasons—typically where he is an appointed representative—and allows the Part XX exemption to apply even where he carries on regulated activities outside Part XX, if he carries them on as an exempt person. That amendment is also welcome. Amendment No. 175B seeks to amend Clause 327. It is consequential on Amendment No. 175A and is also completely acceptable.
I am pleasantly surprised to observe that Amendment No. 175C was tabled by us. In Committee, the Minister may recollect that I raised the question of whether the Treasury would be required to make it clear, in its regulated activities order, that merely advising on the legal implications of an investment transaction—typically an agreement for the acquisition of shares—and arranging for the documentation to be entered into, including negotiating its terms, should not be treated as investment advice or arranging deals for the purposes of authorisation. Amendment No. 175C provides for that exemption and, I readily admit, is in the nature of a probing amendment, enabling me to make this point again as the Minister will be only too well aware that there was no response from the Government in Committee.
The need for this exemption applies to all corporate financial legal advisers, but is particularly important in the case of non-UK law firms. Most of such firms, and in particular American, Australian and Canadian firms, and firms from continental Europe, establish their London offices to advise on corporate finance transactions, rights issues, placings and bond issues.

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None of those firms can take shelter under the Part XX exemption because they are not subject to regulation by the Law Society. That is why it is so important to make it clear that, as I believe is the law anyway, those activities which relate to the transaction in which an investment is bought or sold rather than to the investment itself, are not regulated activities.
It should be clear that activities which relate to investments, but are certainly not investment activities requiring authorisation under the Bill, do not need to he restricted in the way required by Part XX or to be subject to regulation by the Law Society and indirect oversight by the authority. I beg to move.
6 p.m.
Lord McIntosh of Haringey: My Lords, let me start with Amendment No. 157QA, which seeks to ensure that a person will not be guilty of an offence by reason of a contravention of a rule, regardless of which body authorised the rule. In particular, the intention is to ensure that a professional firm which seeks to benefit from the regime under Part XX of the Bill does not commit an offence if it carries on or holds itself out as carrying on an activity other than one which it may carry on under rules made as a result of Clause 327(3).
Any provision which had the effect intended would undermine an important effect of Clause 322(5). This subsection provides that a professional firm, seeking to benefit from the Part XX exemption, will need to ensure that it does not carry on, or hold itself out as carrying on, a regulated activity other than one which rules made as a result of Clause 327(3) allow it to carry on.
The noble Lord, Lord Kingsland, made the point about US law firms. I have the relevant copy of Hansard in front of me. I believe I answered the point then, but I shall certainly attempt to answer it now. Part XX exemption is available to members of designated professional bodies only. As it is not a legal requirement that US law firms—I suppose that that is true of Australian and Canadian firms, although I am not familiar with that issue—should register with the Law Society of England and Wales in order to provide professional services in the United Kingdom, it is unlikely that US law firms will be members of a designated professional body and so they will be unable to benefit from Part XX exemption. Therefore, if they wish to conduct a regulated activity which is excluded under the Regulated Activities Order, they will need to be authorised by the FSA.
As regards investment business, which is what I believe the noble Lord, Lord Kingsland, was speaking about, there is no current intention that the position under the Regulated Activities Order should be any different from the position under the Financial Services Act. It is difficult to see why US law firms should require authorisation under the Bill if they do not require it now under the Financial Services Act. If there are concerns on that score they can be considered in the context of our proposals for the Regulated Activities Order. I suggest that they do not need to be covered on the face of the Bill.
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I return Amendment No. 157QA. I said on 18th April at Report stage that, where a breach of Clause 322(5) prohibition occurs, it is important that the offending firm be subject to the authorisation offences set out in Clause 21. That also applies to "holding out". We cannot risk professional firms giving the impression that they are free to operate outside the regime for which Part XX of the Bill makes prevision. The Opposition's amendment is clearly intended to counter these effects.
It is important to recognise that professional firms are being treated no differently from other firms which conduct regulated activities, but which are not authorised by the FSA. I hope that the noble Lord will not pursue that amendment.
I turn now to government Amendments. Nos. 172A, 174A, 175A and 175B. I was grateful for the support for Amendments Nos. 175A and 175B. These are four amendments to Part XX of the Bill to allow professionals who are carrying out exempt regulated activities also to be exempt persons under the Bill. These are raised in response to concerns recently expressed by the Institute of Chartered Accountants. It is a new issue which has been brought to our attention; namely, that a professional firm carrying out exempt regulated activities under Part XX will be prevented from taking advantage as an exempt person of the exemption set out in Clause 37. We have concluded that Part XX should not have the effect, in keeping with our overall approach throughout the Bill, to provide for a proportionate regulatory regime while maintaining a suitable degree of consumer protection. So we are amending Clause 322 so that a professional firm carrying out exempt regulated activities under Part XX of the Bill will not be held to be in breach of the prohibition. We propose to amend Clause 322(7) so that where a professional firm carries on exempt regulated activities under Part XX, it may also carry on activities as an exempt person at the same time.
We are also amending Clause 327 so that the professional body rule-making requirement does not extend to regulated activities conducted by professional firms as exempt persons under, the Bill. As the noble Lord, Lord Kingsland, recognised, the final amendment is a technical one to the definition of "exempt regulated activities".
I turn now to the opposition Amendments Nos. 173A and 175C. The protection of consumers requires specific criteria to be met. One of these is that professional firms should not receive any benefit as a result of carrying on a regulated activity other than from clients. That is in line with a professional's general obligation to act in the best interests of his client. A professional, in considering what should be the source of any third party advice to his client, should refer solely to what his client needs.
Amendment No. 173A would allow professional firms to benefit from a commission-sharing arrangement with an independent financial adviser, when the client consents. I am sure that professional firms will always want to be seen acting in their client's best interests. However, this amendment will raise

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doubts about whether a client is being best served where, for example, he is steered towards an independent financial adviser who has a commission-sharing arrangement with the professional concerned rather than with one who does not. I do not believe that that is desirable.
Amendment No. 175C raises an important issue; namely, what should be the status of professionals under the new regime when providing advice on, or negotiating the terms of, an investment agreement on behalf of their clients. The noble Lord, Lord Kingsland, raised this matter at Committee stage. There is a debate on which investments and activities should be regulated. That relates to Clause 20 of the Bill and, more specifically, the Regulated Activities Order.
I hope that the House will be reassured by the fact that the draft order, which we circulated in February last year, proposes a number of exemptions which will benefit professionals as well other financial services providers. There will be a chance to debate the draft Regulated Activities Order as it is subject to the affirmative resolution. We shall clarify in due course whether the activities covered by the amendment fall within any or all of these exclusions. In the meantime I hope that it will be recognised that providing an exemption that benefits professionals solely as regards specific regulated activities will put professional firms at a competitive advantage over other financial services providers and could impact heavily on consumers. We cannot support that amendment either.
Lord Kingsland: My Lords, I am becoming more and more depressed. I shall read very carefully the Minister's reaction to all the amendments that we have tabled in order to consider what to do at Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 151 [Consultation]:
Lord Kingslandmoved Amendment No. 157RA:
Page 73, line 2, at end insert ("together with an explanation of the methodology employed in carrying out the analysis").
The noble Lord said: My Lords, this clause concerns the consultation procedure which the authority must follow when proposing to make rules. One of the requirements is the preparation of a cost benefit analysis, which must accompany the draft of the rules when it is published for consultation.
The first of our amendments, Amendment No. 157RA, would require the cost benefit analysis to include an explanation of the methodology employed in carrying it out. I assume that there cannot be any objection to giving an explanation. There will be a methodology and it would be simple enough to set that out. It would be helpful to those considering the draft rules to know what methodology was employed and therefore what factors the authority has taken into account in determining the costs and benefits of the draft rules.
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We believe that one particular benefit that the authority should consider is the increase in business activity, if any, which is expected to arise if the proposed rules are made. Rules tend to restrict the way in which a person can behave. No doubt regulators see their function in terms of controlling the behaviour of those whom they regulate. In our view it would be unfortunate if the natural tendency of regulators to control, and therefore to restrict behaviour, was not counterbalanced by a requirement at least to consider the impact of their rules and regulations on business activity.
We, on this side of the House, believe that good regulation should enhance business activity. The purpose of Amendment No. 157TA is to require, as part of the cost benefit analysis to be carried out by the authority, an analysis of any increase in business activity which is expected to arise if the proposed rules are made. We have used the words "any increase" as we recognise that there may be no increase in business activity. But the provision would require the authority to apply its mind to the issue.
Amendment No. 157SA concerns Clause 151(7), which excludes the obligation on the authority to consult on proposed rules where the authority considers that the delay involved in carrying out the consultation would be prejudicial to the interests of consumers. In these circumstances, the amendment would require the authority to publish, first, a cost benefit analysis; secondly, an explanation of the purpose of the proposed rules; and, thirdly, an explanation of the authority's reasons for believing that making the proposed rules is compatible with its general duty under Clause 2, at the same time as, or as soon as practical, after the relevant rules are made. The fact that the authority can make rules without consultation in certain circumstances should not remove the authority's obligation to deal with these particular matters in relation to the rules in question.
Amendment No. 157UA to Clause 152 addresses a rather different issue. We are concerned that many of the authority's rules will escape the discipline of the cost benefit analysis requirement because they will not be made under Clause 151 and will be "grandfathered" under transitional provisions. When he replies, perhaps the Minister will be kind enough to clarify the position on the "grandfathering" of existing rules.
Our other area of concern is that rules that have been made through the consultation process, including a cost benefit analysis, may cease to be appropriate over time. There does not appear to us to be any mechanism in the Bill for the review of such rules. The Minister will recall that the Opposition tabled a provision in Committee which would have obliged the authority to review and consult on existing rules three years after they were made. We were told that that would impose too great a burden on the authority.
Our proposed amendment to Clause 152 is a much more modest proposal. It simply requires a cost benefit analysis to be carried out as soon as practicable after the third anniversary of the making of any rule. There would be no obligation to consult, but the regulated

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community would have the comfort of knowing that the rules which govern and regulate its activities would be scrutinised in the context of a cost benefit analysis on a regular basis. We believe that every three years is a more than reasonable period for these purposes. I beg to move.
6.15 p.m.
Lord Newby: My Lords, we have considerable sympathy with the principal purpose of this clause; namely, that the authority should publish rules in draft, seek comments on them and then explain its view on the comments received. I explained in Committee the difficulty that we have with cost benefit analysis in this context. Frankly, it is almost impossible for such an analysis to be rigorous or even, in most cases, of any value whatever. Therefore, I wish briefly to comment on three of the amendments before us.
Amendment No. 157RA is an extremely small amendment. I hesitate to say that it is almost certainly otiose, but I suspect that it is. Amendment No. 157TA seems to me to exemplify the problem with cost benefit analysis in these cases. If the amendment were carried, someone would be asked to speculate—it cannot be anything more than that—on any increase in business activity that is expected to arise if the proposed rules are made. The judgment of Solomon would be nothing compared to the task of the poor character who would have to speculate on the benefits that might accrue from the passing of a rule, the main purpose of which might be to prevent certain kinds of action rather than to promote them. So we do not support this amendment.
Therefore, a fortiori, we find Amendment No. 157UA—a watered-down variant of the amendment to which I spoke in Committee—equally unacceptable. It suggests that a procedure with which we have considerable difficulty should be repeated unnecessarily. In the circumstances, we cannot support this amendment.
Lord Boardman: My Lords, the phrase "cost benefit analysis" has crept into commercial jargon in recent years to a most unfortunate extent. It is quite meaningless, unless you have a clear definition of the costs and an equally clear definition of the benefits that are to be set against them. It has been thrown about so often to justify whatever the thrower wishes to justify that it has no reasonable translation into anything meaningful. It would be very regrettable if the phrase were left in the Bill without the addition of the amendment proposed, which would ensure that the methodology used in such calculations would be clearly shown. Without such an addition, it will be a meaningless symbol.
Lord Borrie: My Lords, I found the last two speeches from the noble Lords, Lord Newby and Lord Boardman, to be extremely refreshing. The phrase "cost benefit analysis" trips off the tongue. One hears it all the time. During the Second Reading the other day of the Utilities Bill, my noble friend made a point
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that I believe would be most relevant to this debate; namely, that it is easier to establish the cost side of the matter than it is to establish the benefit side. Anyone who has an anti-regulatory philosophy like the noble Lord, Lord Kingsland, is bound to want a cost benefit analysis every week or, if possible, every month.
It is very easy to establish the pound sign as regards the costs involved, but it is much more difficult to establish the nature of the benefits. When you set the two alongside each other, you often get set out very neatly on one side the sign that the accountants can understand—the pound sign and the costs—while on the other are the benefits such as greater competition, more choice and more understanding by the public of the information that they receive. The provision of that information has a cost, but it is very difficult to put a pound sign against it.
I felt that I should make those comments because the last two speeches highlighted the matter. I listened to several of the speeches made by the noble Lord, Lord Kingsland, this afternoon, so I am perhaps feeling slightly depressed because so few other voices have been heard. I was very glad to hear the last two noble Lords speaking as they did.
Lord McIntosh of Haringey: Indeed, my Lords, and that applies to my noble friend. I bear the scars of cost benefit analysis. I used to bank with the National Westminster Bank when I was in business. My branch manager, or my business centre manager as he became, used to demand proof for all the forecasts that I made. He told me that I must do it by way of cost benefit analysis. I promptly asked, "What do you mean?"— I shall not go into the detail of his response. It was probably while the noble Lord, Lord Boardman, was chairman of the National Westminster Bank, or soon afterwards. I, too, am glad that the duologue between myself and the noble Lord, Lord Kingsland, has been broken. Thank goodness for that!
The amendments now before us would change Clause 151, which sets out the consultation procedures that the FSA must follow when making rules. This is an extensive consultation procedure, which we have strengthened during the course of the Bill's passage through Parliament. It is only right that we should do so because the FSA must consult widely among the regulated community when making rules. Perhaps I may explain why, in the Government's view, two of the amendments are unnecessary and why the others are inappropriate.
Amendment No. 157RA would require the FSA to publish an explanation of the methodology that it uses when it publishes a cost benefit analysis. There are already safeguards on this in the consultation process. The cost benefit analysis is published alongside the draft rule. The FSA must give notice that representations about the draft rule may be made to the FSA. Moreover, the FSA must have regard to these representations and must, in general terms, publish an account of them and its response.
Let us suppose that the FSA made a rule that specified only in vague terms that the benefits outweighed the costs. I cannot imagine that it would

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take long for it to receive representations that the costs and benefits had been insufficiently justified; in other words, the incentives are already there for the FSA to explain how it arrives at the costs and benefits of any rules, with all the qualifications that have been made about the difficulties of establishing benefits.
While still on cost benefit analysis, I should point out that the Government have said on a number of occasions that we do not believe it appropriate to specify on the face of the Bill the methodology used. I said in Committee—this will teach me to make jokes—that,
"those who conduct such analyses, such as the consultancy divisions of some major accountancy firms—
making sure that the noble Lord, Lord Sharman, was present—
"frequently change their methodologies because a good number of them do not work … We do not believe that we should prescribe details of that kind in a Bill which must survive for a number of years to come".—[Official Report, 27/3/00; col. 566.]
Allowing for my levity, the principle remains the same. If we were to specify that any increase in business activity be included as one of the benefits from a proposed rule, we would freeze cost benefit analysis and we would not have the flexibility of adopting the right kind of cost benefit analysis for the right purpose.
I turn to Amendment No. 157UA which requires the FSA to carry out a cost benefit analysis of rules three years after they have been made. I notice that the noble Lord, Lord Kingsland, has not specified that the methodology should be included in this three yearly review. The noble Lord, Lord Kingsland, seems to think that our objection to this amendment, or to the comparable amendment in Committee, is that it would create too great a burden. That is not our objection. Our objection is that the amendment would require a blanket approach to review each and every rule every three years. That means an awful lot of unnecessary work. Not every rule will need reviewing, and of those that do, for some three years will be too long to wait for a review, for others it will not be long enough.
As I said to the noble Lord, Lord Saatchi, in considering a similar amendment in Committee,
"The potential to create bureaucracy is created precisely by this amendment. The amendment would place a huge strain on the authority and divert time and money away from its proper business—regulating—but it would also have knock-on effects on the regulated community and consumers. The regulated community would have to pay the costs of the review and consultation, and consumers would have to put up with the disruption involved".—[Official Report, 27/3/00; col. 566.]
That is exactly comparable to what would happen if we had a review after a statutory period rather than when it is necessary and, for example, when the consumer and practitioner panels decide that a review is necessary after they have performed their functions of considering the effectiveness of existing rules.
I turn finally to Amendment No. 157SA. This seeks to change subsection (7) of Clause 151. This subsection allows the FSA not to comply with the consultation procedures in Clause 151 when the delay involved in doing so would be prejudicial to the interests of
1424
consumers. This is a clever amendment because it does not dispute the need for the FSA to override procedures, but asks that it publish the information required for consultation—a cost benefit analysis, an explanation of the purpose of the proposed rules—on or as soon as practicable after making the rule.
However, Clause 151 is about the FSA's consultation procedures. The cost benefit analysis and other material are to help inform consultees about the proposed rule. It seems a little bureaucratic to ask the FSA to provide supporting material for a consultation process which has been overriden.
There are legitimate concerns about the FSA providing a justification for its rules, even for those which have to be drawn up quickly. It may in the event be able to provide the information sought by the amendment when the rule is made. However, we certainly do not favour imposing a requirement on the FSA to provide supporting material after the event. I do not know whether my response will depress or distress noble Lords, but I am afraid that none of the amendments that I have addressed will work.
Lord Kingsland: My Lords, I think that everyone would agree that cost benefit analysis has its weaknesses. However, I, for one, cannot understand how cost benefit analysis can be undermined by the publication of the methodology which was used in making that analysis. I can see only that that could enhance its quality. What possible objection can the Minister have for not publishing the methodology used to compile a particular cost benefit analysis? I am forced to the conclusion that the only motive the Minister can have is to disguise the quality of the evidence, whatever that evidence may be.
The Minister must accept that the money used to pay the authority comes from the City. It does not come from the taxpayer. The City is entitled to know whether that money is being used helpfully or otherwise. It is entitled to know whether the burdens it is required to bear as the result of what the authority is doing to it yield useful results. That can be done only if the methodology by which the FSA goes about its rule-making procedure is clearly understood. In my submission the Minister's response to the amendments is totally unacceptable. In those circumstances I wish to test the opinion of the House.
6.25 p.m.
On Question, Whether the said amendment (No. 157RA) shall be agreed to?
Their Lordships divided: Contents, 92; Not-Contents, 149.

Division No. 1

CONTENTS

Allenby of Megiddo, V.

Blackwell, L.

Anelay of St. Johns, B.

Blaker, L.

Astor, V.

Blatch, B.

Astor of Hever, L.

Boardman, L.

Attlee, E.

Brabazon of Tara, L.

Beaumont of Whitley, L.

Bridgeman, V.

1425

Burnham, L. [Teller]

Mackay of Ardbrecknish, L.

Buscombe, B.

Marlesford, L.

Byford, B.

Masham of Ilton, B.

Campbell of Alloway, L.

Miller of Hendon, B.

Campbell of Croy, L.

Molyneaux of Killead, L.

Carlisle of Bucklow, L.

Monro of Langholm, L.

Carnegy of Lour, B.

Monson, L.

Clark of Kempston, L.

Mowbray and Stourton, L.

Colwyn, L.

Moynihan, L.

Cope of Berkeley, L.

Murton of Lindisfarne, L.

Courtown, E.

Naseby, L.

Cranborne, V.

Northbrook, L.

Crickhowell, L.

Northesk, E.

Dean of Harptree, L.

Norton of Louth, L.

Dixon-Smith, L.

O'Cathain, B.

Elton, L.

Onslow of Woking, L.

Flather, B.

Park of Monmouth, B.

Fookes, B.

Patten, L.

Forsyth of Drumlean, L.

Pearson of Rannoch, L.

Fraser of Carmyllie, L.

Peel, E.

Freeman, L.

Pilkington of Oxenford, L.

Gardner of Parkes, B.

Prior, L.

Geddes, L.

Reay, L.

Glenarthur, L.

Renton, L.

Glentoran, L.

Rogan, L.

Goschen, V.

Rotherwick, L.

Gray of Contin, L.

Saatchi, L.

Harris of Peckham, L.

St. John of Fawsley, L.

Henley, L. [Teller]

Seccombe, B.

Higgins, L.

Sharples, B.

Home, E.

Skelmersdale, L.

Howe, E.

Stewartby, L.

Hunt of Wirral, L.

Stodart of Leaston, L.

Jopling, L.

Strathclyde, L.

Kimball, L.

Taylor of Warwick, L.

Kingsland, L.

Thomas of Gwydir, L.

Lamont of Lerwick, L.

Trefgarne, L.

Lane of Horsell, L.

Waddington, L.

Lucas, L.

Wakeham, L.

McConnell, L.

Young, B.

NOT-CONTENTS

Acton, L.

Darcy de Knayth, B.

Ahmed, L.

David, B.

Alli, L.

Davies of Coity, L.

Alton of Liverpool, L.

Dean of Thornton-le-Fylde, B

Amos, B.

Desai, L.

Archer of Sandwell, L.

Dholakia, L.

Ashley of Stoke, L.

Dormand of Easington, L.

Ashton of Upholland, B.

Dubs, L.

Avebury, L.

Elder, L.

Bach, L.

Evans of Parkside, L.

Barnett, L.

Falkland, V.

Bassam of Brighton, L.

Farrington of Ribbleton, B.

Berkeley, L.

Faulkner of Worcester, L.

Billingham, B.

Filkin, L.

Blackstone, B.

Fitt, L.

Blease, L.

Gale, B.

Borrie, L.

Gavron, L.

Bragg, L.

Gilbert, L.

Brett, L.

Gladwin of Clee, L.

Brooke of Alverthorpe, L.

Goldsmith, L.

Brooks of Tremorfa, L.

Goodhart, L.

Burlison, L.

Gordon of Strathblane, L.

Carter, L. [Teller]

Goudie, B.

Chandos, V.

Gould of Potternewton, B.

Christopher, L.

Graham of Edmonton, L.

Clarke of Hampstead, L.

Grenfell, L.

Clement-Jones, L.

Hardy of Wath, L.

Cocks of Hartcliffe, L.

Harris of Greenwich, L.

Cohen of Pimlico, B.

Harrison, L.

Colville of Culross, V.

Hayman, B.

Craig of Radley, L.

Hilton of Eggardon, B.

Crawley, B.

Hogg of Cumbernauld, L.

Currie of Marylebone, L.

Hollick, L.

1426

Hollis of Heigham, B.

Prys-Davies, L.

Howells of St Davids, B.

Ramsay of Cartvale, B.

Howie of Troon, L.

Rea, L.

Hoyle, L.

Rendell of Babergh, B.

Hughes of Woodside, L.

Richard, L.

Hunt of Kings Heath, L.

Rodgers of Quarry Bank, L.

Irvine of Lairg, L. (Lord Chancellor)

Rogers of Riverside, L.

Sainsbury of Turville, L.

Islwyn, L.

Sawyer, L.

Jay of Paddington, B. (Lord Privy Seal)

Scotland of Asthal, B.

Serota, B.

Kennedy of The Shaws, B.

Sewel, L.

Kirkhill, L.

Sharman, L.

Lea of Crondall, L.

Sheppard of Liverpool, L.

Levy, L.

Shore of Stepney, L.

Lipsey, L.

Simon, V.

Lofthouse of Pontefract, L.

Smith of Clifton, L

Lovell-Davis, L.

Smith of Gilmorehill, B.

Ludford, B.

Smith of Leigh, L.

Macdonald of Tradeston, L.

Stoddart of Swindon, L.

McIntosh of Haringey, L. [Teller]

Strabolgi, L.

Symons of Vernham Dean, B

McIntosh of Hudnall, B.

Taylor of Blackburn, L.

MacKenzie of Culkein, L.

Thornton, B.

Mackenzie of Framwellgate, L.

Tomlinson, L.

Mackie of Benshie, L.

Tordoff, L.

Mar and Kellie, E.

Turner of Camden, B.

Mason of Barnsley, L.

Uddin, B.

Massey of Darwen, B.

Varley, L.

Merlyn-Rees, L.

Walker of Doncaster, L.

Molloy, L.

Wallace of Saltaire, L.

Morris of Castle Morris, L.

Walpole, L.

Morris of Manchester, L.

Warner, L.

Newby, L.

Warwick of Undercliffe, B.

Nicol, B.

Watson of Richmond, L.

Northfield, L.

Wedderburn of Charlton, L.

Oakeshott of Seagrove Bay, L.

Whitaker, B.

Palmer, L.

Whitty, L.

Patel, L.

Wilkins, B.

Patel of Blackburn, L.

Williams of Crosby, B.

Pitkeathley, B.

Williams of Elvel, L.

Plant of Highfield, L.

Williams of Mostyn, L.

Ponsonby of Shulbrede, L.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.35 p.m.
[Amendments Nos. 157SA and 157TA not moved.]
Clause 152 [General Supplementary Powers]:
[Amendment No. 157UA not moved.]
[Amendment No. 157VA not moved.]
Clause 153 [Guidance]:
[Amendments Nos. 157WA and 157XA hot moved.]
Lord Saatchimoved Amendment No. 157YA:
After Clause 154, insert the following new clause—
("CHAPTER IIA
POLICIES RELATING TO TAKEOVER REGULATION MARKET ABUSE: BEHAVIOUR CONFORMING WITH CITY CODE

.—(1) Subject to subsections (2) and (3), the code issued under section 116 may state that behaviour of a person which is in conformity with the City Code does not amount to market abuse.

(2) Subsection (1) does not apply in respect of behaviour which satisfies the condition in section 115(2)(a).

1427

(3) A statement made under subsection (1) may include such conditions and limitations as the Authority considers appropriate, including conditions and limitations concerning the categories of behaviour and classes of person covered by the statement.

(4) If a person behaves in a way which fulfils the requirements of any statement included pursuant to subsection (1) in the code issued under section 116, that behaviour of his is to be taken, for the purposes of this Act, as not amounting to market abuse.").

The noble Lord said: My Lords, I hope I will be forgiven if I detain your Lordships' House for a few minutes in order to give the background to this group of amendments. I do that because when we discussed similar amendments on the last day of the Committee stage it was very late at night—I think it was nearly midnight. I think it is fair to say that the amendments evoked some sympathy from noble Lords on all sides of the House. Therefore we want to visit them in a little more detail today. We brought forward two amendments in Committee. We are again bringing forward two amendments, but in a slightly modified form. I shall explain the modifications in a moment.
We said that we believe that the best way to safeguard effective take-over regulation in the City, while also enabling the FSA to administer the market abuse regime across all markets, was to amend the Bill in two ways. First, so that behaviour which complies with the take-over code would not constitute market abuse—that is, it would be what is called a "safe harbour"; and, secondly, in cases of non-compliance with the take-over code, the panel would have the ability to pass serious cases to the FSA. This would be based, we hoped, on criteria and parameters, which we believed could be pre-agreed between the panel and the FSA, in order that the FSA could consider whether market abuse had occurred and whether to take further action. But, other than in those circumstances, the FSA would not intervene directly. That was the point of our second amendment. In other words, we were trying to say that the panel would be the initiator; it would be, if you like, the gatekeeper.
But at the time the Treasury stated that it did not want to create what it thought would be the unusual situation of a non-statutory body being responsible for deciding, in respect of certain abuses, whether and when action could be taken under a statutory regime. The position then was that the Treasury stated that it did not want the FSA's powers to intervene in cases of market abuse, as it saw it, to be fettered in any way by the existence of the Takeover Panel. The reason the Treasury gave was that it believed that self-regulation had failed in the regulation of market abuse and needed to be replaced by statutory regulation. That was the point of the Government's objection to our two amendments.
I am pleased to say that since then there have been many discussions among all the parties—the Treasury, the Financial Services Authority and the Takeover Panel—but I am disappointed to report to your Lordships' House that, despite the best efforts of all the parties concerned, they have not been able to reach an agreement. Therefore, we are having to return to these points again. Although the three parties do not appear to have reached agreement on the way forward, apparently some things have been agreed between
1428
them. What seems to have been agreed is that the panel system of regulation is acknowledged around the world as successful and effective. The Government's approach to the European 13th company law directive on takeovers—known as the takeover directive—makes clear that they share that view and do not wish to alter the current system.
It also seems to be agreed by the panel, the FSA and the Treasury that there is a significant overlap between the panel's regulation of takeovers and the FSA's responsibility for the new market abuse regime under the Bill. It is also agreed by the three parties that regulatory overlap is undesirable. The panel, the FSA and the Treasury are apparently also in agreement that the panel's regulation of takeovers should not be undermined and that the FSA apparently does not wish to be drawn into takeover regulation in parallel with the panel.
There, I am afraid, the points of agreement end and the points of disagreement begin. We understand that it is the panel's view that the Government's proposals in the Bill as it now stands will,
"seriously undermine effective takeover regulation as they are likely to lead to delay and will cause damaging uncertainty".
The panel also states that:
"They are also likely to lead to increased litigation".
With respect to the panel, it is agreed among all the parties that its reputation is excellent. Therefore, it is worth spending a moment looking at what the panel is saying in those quotations because they are serious and worrying charges.
It is certainly in no one's interest for one regulator to be critical of the regime of another regulator in this country if only because, human nature being what it is, the other regulator is likely then to return the compliment. That is surely not the path that we want to go down. Therefore, with the hope of bringing harmony where there is discord, if I may use a famous phrase, our new amendments have now been modified to reflect the debate in Committee and in the hope that they may in this form attract more government support.
First, our provision relating to the need for consultation by the FSA with the panel prior to any exercise of its powers which might impact on a bid has been removed. We have done that because the FSA has now offered to make a public statement which confirms that it will do just that. Secondly, a new subsection has been included in each clause to give the FSA an overriding power to impose limitations and conditions on the practice of the Takeover Panel's City code. We understand that it is desirable to give maximum flexibility to the FSA to carry out its remit. For example, if a bidder were to make a misleading statement which had an impact on the share prices of every company in the same sector as the target, the FSA should be free to take action against the bidder under the market abuse regime without the need for a request from the panel. Our proposal, which is that the FSA will have an ability to impose conditions or limitations on the conduct of the code, would allow the FSA to do that. Under these amendments, the FSA

1429
will be able to bypass both provisions—the safe harbour provision and the gatekeeper provision—if it feels that it urgently has to do so. The key point is that in the real world the panel is making dozens of rulings every week on the application of the City code and it constantly gives informal guidance to those who seek advice on its code. Apparently, its decisions sometimes have to be made in a matter of minutes.
The Takeover Panel as presently constituted is able to do that because interpretation of the City code is not a matter of law. The City code is no more than a n umber of general principles which are expressed in broad terms and are what a "reasonable person" or, if your Lordships prefer, a "regular user" would regard as good standards of commercial behaviour. These are applied by the panel in accordance with their spirit—in other words, to achieve their underlying purpose—and the panel can relax or modify the effect of their precise wording accordingly. The panel looks to see that the spirit is observed as well as the letter and the panel can modify or relax a rule if it considers that in the particular circumstances of the case the rule would operate unduly harshly or in an unnecessarily restrictive or burdensome manner.
That is why we believe that our amendments are consistent with the definition of market abuse in the Bill which we have now settled after lengthy debate. We have agreed that conduct is not market abuse unless it is likely to be regarded by a regular user as a failure on the part of the person concerned to observe the standard of behaviour reasonably expected. That can be applied perfectly well to the current panel procedures which we wish to preserve precisely because it is unlikely that a regular user would regard a person who has complied with his City code responsibilities as having failed to observe this standard of behaviour.
Unless conduct which conforms with the City code has the scope to create a safe harbour, which is the thrust of our first amendment, there will be scope instead for tactical complaints to the FSA during takeover bids, tactical attempts to review the FSA's decision and tactical potential for delaying the bid process. Our amendments remove those possibilities. They also remove the need for the FSA to consider complaints made to it. They also remove the possibility that the FSA may actually and publicly have to disagree with the panel. We should not provide scope for disaffected parties in a bid to make tactical complaints to the FSA regarding the panel's decisions. If they could do that, the FSA would need to give sufficient consideration to those complaints to be able to demonstrate if challenged, as it might be, that it had approached with an open mind the question of whether or not it needed to exercise its powers. In any event, the whole process of the FSA considering these matters is likely to cause delay simply because the involvement of two regulators will inevitably be slower than one. Will the FSA be able to make its decisions in the kind of timescales to which the panel operates?
Perhaps I may give an example. Consider what would happen if we open up in the Bill, as would be the case without our amendments, the possibility for
1430
tactical applications for judicial review of the FSA's decisions on the exercise of its enforcement powers in a hard-fought takeover battle. If the FSA does not exercise its powers, it may be reviewed on the basis that it has fettered its discretion. If it does exercise its powers, it may be reviewed on the basis that it has frustrated legitimate expectations. Either way, there is the potential for delay and confusion at a critical moment in the lives of corporations and individuals.
In conclusion, I hope that the Minister will either shortly accept the amendments or, better still, will announce that, as a result of his offices, agreement has been reached on a sensible modus operandi between the Financial Services Authority and the panel. I beg to move.
Lord Newby: My Lords, I find this to be one of the most vexing issues raised by the Bill, because one starts out with a large degree of common ground, as the noble Lord, Lord Saatchi, has outlined. First, it is clear that any overlap between the panel and the FSA in relation to market abuse should be minimised. Secondly, it is common ground that the panel does extremely valuable work, and does it extremely well, and that nothing in the Bill should undermine that work in that the FSA should not seek to duplicate the work of the panel. Thirdly, it is common ground that if the panel system fails, the FSA's powers may well be needed. But at that point the common ground breaks down.
The amendments seek to deal with the problem by, first, extending the safe harbour provision in Clause 18 to behaviour conforming with the City code and, secondly, seeking to introduce a gatekeeper provision, so that where a person has not followed the City code the FSA cannot exercise its powers under the market abuse regime, except following a request by the panel.
Both amendments seek to avoid confusion, and both would, I suspect, largely achieve that objective. Unfortunately, I am not sure that both would produce the correct result. Of the two amendments, I am sympathetic to the first. It is difficult to see an argument for pursuing someone who has complied with the City code in the circumstance in which safe harbour provisions already exist in relation to the market code that is to be introduced under Clause 16. If there is a safe harbour for the market code, the argument for having a safe harbour for the City code is extremely strong.
The second amendment causes us more difficulty. We have had significant and long discussions with both the FSA and the Takeover Panel on the issue. The Takeover Panel's view in a nutshell is that without the amendment there would be delay and a loss of effectiveness of the regulation of market abuse. The FSA's view is that if the amendment is agreed to there will be delay and a loss of effectiveness in the regulation of market abuse. Faced with those two strongly held views, our principal concern is that if the amendment were to be carried it would debar the FSA from taking action in any case where it believed there

1431
could be market abuse in the context of a merger. That seems an undesirable fettering of the role of a principal and primary regulatory body.
I am slightly concerned also about the way in which the Takeover Panel envisages the amendment operating. The first line of Amendment No. 157ZA contains the dread word "may". The amendment states that the authority "may adopt a policy". My understanding of the way in which the panel sees the amendment operating, were it to be carried, is that, before it came into effect and before the "may" became "shall" or "have to", there would need to be agreement on a policy statement as to how the two bodies would work together, a statement would need to be inserted into the market code, and operating arrangements would need to be agreed between the two bodies. Furthermore, if such a provision came into force, the FSA would have the right at some point to withdraw its agreement to the operation of the amendment. That is my understanding of how the panel sees the proposal working.
This seems to be a model. The best approach, as the noble Lord, Lord Saatchi, has said, would be for the FSA, the panel and the Treasury to produce a code of practice covering all these issues and in particular the circumstances in which the FSA might seek to intervene, and equally the circumstances in which the panel would take the lead and the FSA would not seek to intervene. In some senses that seems to be the approach that has been successfully followed by the Treasury, the Bank and the FSA in dealing with systemic risk: a policy document rather than a statement on the face of the Bill dealing with how the three bodies, all of which have a role to play in respect of systemic risk, will deal with circumstances which, in the area of mergers and takeovers, can require action to be taken very quickly. Were such an agreement to be drawn up, it would greatly reduce the likelihood and scope for judicial review, which is understandably a concern as matters stand.
Talks have been under way for some time to achieve such an agreement but they have yet to reach a positive outcome. My preference would be for the Treasury, in time-honoured fashion, to get a grip on all these matters and seek to achieve a quick agreement which would allay the fears of the panel without completely preventing the FSA from having any powers of initiative. The talks have been continuing, but, given what I have heard from the participants, without any great sense of urgency. It is the fact that there is no agreement in this area, when there has been agreement in such areas as systemic risk, which causes the problems with which we are now grappling. It would have been far preferable had such an agreement been reached by now, or if it could be reached by Third Reading. I suspect that that is wishing for the moon. However, I should welcome an assurance from the Minister that efforts to achieve an agreement will be intensified, with the Treasury taking a more proactive stance on this most vexatious matter.
Lord Forsyth of Drumlean: My Lords, I should remind the House that I have an interest in this area as a practitioner in mergers and acquisitions and as someone authorised by the FSA. All noble Lords will have seen the material circulated by the Takeover Panel. The panel is clearly concerned about these matters. I support my noble friend Lord Saatchi in these amendments because I believe that they deal with a serious issue.
I once saw a cartoon showing two Treasury officials standing outside their department in Whitehall—I hasten to add that it was while we were in government, but I am sure nothing has changed—and one was saying to the other, "Well, that's all very well in practice. What's wrong with it in theory?" I have the impression that one of those officials was responsible for drafting parts of the Bill. I give way to the Minister who I am sure is about to show his knowledge of philosophy.
Lord McIntosh of Haringey: My Lords, I would merely say that it is not Treasury officials; it is Wittgenstein.
7 p.m.
Lord Forsyth of Drumlean: My Lords, if the Minister has not learnt by now that Treasury officials were weaned on Wittgenstein, then I am very concerned indeed.
The key element is that the proposed market abuse regime would undoubtedly undermine the Takeover Panel. What has driven this proposal is the idea of having to achieve consistency. Perhaps the Minister can say who came up with the other cliché that if it is not broken we should not try to fix it. The system as it operates at present is certainly not broken; it works extremely well, and in circumstances that are often complex and require action very quickly and sometimes in the early hours of the morning, such are the extraordinary ways in which takeovers and mergers are carried out.
If the Takeover Panel had got into difficulties or had failed, one could understand the reason for this move to destroy an effective system of self-regulation. The truth is that the panel is well-established—over 30 years—and is well respected. It has the experience, ability and technical knowledge to react quickly and decisively, and also the ability to apply its rules to accommodate changing market circumstances.
Although I declared an interest, I see that at the end of the day if there is any confusion in this area it is advisers, lawyers and others who will make substantial sums of money from the fees that will be generated in order to deal with the chaos that has been caused.
The real beneficiaries of an effective takeover panel and system of regulation are shareholders. The job of the Takeover Panel is to ensure that shareholders' interests are looked after, that they are treated equally and that there is an overall framework for the conduct of takeovers. It is extraordinary that in undermining the Takeover Panel and compromising the system of takeover regulation the proposed market abuse regime

1433
should defeat the fundamental purpose of this Bill: effective regulation. That is what we have now. If one has two authorities with jurisdiction in an area, there is no doubt that there will be cause for confusion, delay and uncertainty. The benefits of speed and certainty of decision will be lost if ultimately the FSA has the ability to intervene during a bid.
In his opening remarks my noble friend referred to the opportunity for tactical manoeuvre if there is uncertainty in the regulatory regime. There are all kinds of very clever people in the City who earn substantial sums by exploiting precisely that opportunity. To create a statutory regime of this kind alongside the Takeover Panel will afford opportunities for judicial review and tactical delay, none of which will be in the interests of shareholders.
If the Minister is not now in a position to accept this amendment perhaps he will look at it again. In the context of takeovers it is essential to create a clear and legally secure boundary between the jurisdiction of the Takeover Panel and that of the FSA. I believe that that is in the interests not only of shareholders but the credibility of this Bill and the FSA itself. As my noble friend observed, the standing and reputation of the FSA, which are essential for the purpose of this Bill, will not be enhanced if it is drawn into controversial and protracted disputes involving complex takeover situations.
Lord Boardman: My Lords, I have known the Takeover Panel for many years, even in the days when its chairman was the noble and learned Lord, Lord Shawcross. Since then the Takeover Panel has had other distinguished chairmen. For many years I sat on that panel. I very much regret that the Takeover Panel has been hooked on to the FSA. The Takeover Panel has worked brilliantly in the most controversial areas where lawyers have not been allowed to participate. That is not a blessing with which all lawyers agree. However, it has the considerable advantage of enabling the panel to get things done speedily. Quite often the announcement of a controversial takeover will he made early in the morning and the panel meets during the day or night. A decision will be made and the code honoured, and that has been one of the great successes of the City. I very much regret that the Takeover Panel is to become bogged down in what is bound to be a mass of bureaucracy, legal cases and time-consuming arguments as a result of involvement in this Bill.
The amendment moved by my noble friend is intended, and rightly so, to reduce the amount of interference in, and give greater freedom to, the Takeover Panel. I applaud it. In many ways I should like it to go further. I support the point just made by the noble Lord, Lord Newby. If the Takeover Panel and FSA can agree with the Treasury on a system which is a continuation of what has happened in the past the panel will be able to hear the facts. Businessmen and others who understand what is at stake can reach a rapid decision, which has always turned out to be to the advantage of the shareholders concerned, rather than become involved in long drawn
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out litigation, as is inevitable when these matters are hooked on to the Bill. I support my noble friend's amendment, although I should like the Takeover Panel to be removed altogether. I understand that that now cannot be. I hope that the system can be given the degree of flexibility which this amendment provides to enable the panel to prosper and serve the industrial sector of this country well in the years ahead.
Lord Donaldson of Lymington: My Lords, I have not had the long experience of the Takeover Panel that other noble Lords, such as the noble Lord, Lord Boardman, have had. The panel swam into my ken when a company called Datafin applied for judicial review of the Takeover Panel. The argument in that case was a fascinating one. It was said on behalf of Datafin that one could not have a body of that kind with powers of life or death, albeit indirectly, over people operating in the City without some external control by the law. As I recall, the noble Lord, Lord Alexander of Weedon, appeared for the Takeover Panel. He said that, first, there was no jurisdiction to review the Takeover Panel judicially because it had no statutory base. In that he was plainly right, although it was not a very appealing argument. Secondly, the noble Lord argued that the Takeover Panel could not operate if there was a possibility of the courts intervening, particularly bearing in mind that the Takeover Panel could on occasion work at lightning speed. He asserted that it would be prevented from so doing if there was an application pending before the courts.
In that case the court decided to ignore the argument that it had no jurisdiction and indulge in a little judicial engineering, in which I take some pride. We decided that the panel could be judicially reviewed but that it never would be in the course of a bid unless the conduct of the panel had been previously condemned by the court in leisurely proceedings following a bid. I believe that that was a very good approach, and the courts have followed it ever since on the rare occasions that anyone has sought to involve them. The involvement of the courts inevitably leads to every kind of tactical manoeuvre and will kill almost any bid stone dead. I am sure that the courts retain that policy at the present time.
However, we must do something about the FSA. If one studies the amendments in broad brush outline, not in detail, one finds that they achieve exactly what the courts have achieved. There is a safe harbour for someone who complies with the City code, and for the moment that is it. If the FSA disagrees it will say to the Takeover Panel that it has got it wrong. One of the great features of the panel is its ability, without the intervention of government or either House of Parliament, to alter the City code. I expect that, as a result of discussions, the City code would be altered and in future the safe harbour would be removed. That was exactly what the courts decided in Datafin and what they have done ever since. If it appears to the FSA that the Takeover Panel is being singularly unresponsive, which is a very unlikely event, it can

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alter its policy so that the matter is taken on board straight away, and Parliament will give it the authority to do so.
It has been suggested that there should be a code devised by the parties to decide when the safe harbour applies or the FSA should exercise its discretion. I do not think that can be done, because the situations are so varied that you will always be legislating for the train which has already left the station. It really would not work. This, I think, would work. Perhaps there are refinements which could be introduced but, apart from anything else, it is important that the authority should have statutory power to adopt a policy of masterly inactivity, which of course is provided by the second amendment.
If you do not have that, you will have trouble with people going to the courts and saying either that they have confined their discretion in a way that is impermissible or that they have never thought about the matter at all. They need that even if they get nothing else, and I hope that the House, if its opinion is tested, will insist on putting these amendments into the Bill.
Lord Elton: My Lords, in considering the very illuminating remarks of the noble and learned Lord, Lord Donaldson, I hope that the Minister will consider the nature of events with which the Takeover Panel is customarily involved. My noble friend Lord Boardman has already alluded to this and I have seen it at first hand as a member of the panel in the past.
The fact is that to think of the panel as exercising the functions of a justice of the peace or a judge is to misunderstand the work that it does. The panel is more in the position of a tennis umpire who has to make immediate decisions which need to be upheld and which need to be practical. That is exactly what the panel is designed to do and what it cannot do if another authority is at any stage able to interpose and stop the game. It would be as absurd for that to happen in a takeover battle as it would be on the Centre Court at Wimbledon
In thanking the noble and learned Lord for making this so clear, I ask the noble Lord, Lord Newby, if he has a moment, to consider whether it is right for the parties which are to be regulated by this legislation actually to make it impossible to perfect the legislation by a failure to agree on how it should operate. I endorse his request that the greatest pressure should be brought to bear on those who need to declare their position on the way it will work so that that agreement shall be available before Third Reading and so that the second of these amendments—or something very like it—can also be incorporated. I can see no reason for delaying the first.
7.15 p.m.
Lord Stewartby: My Lords, I rise briefly to support my noble friend Lord Saatchi and others who have spoken about the need to resolve this matter. I have read and re-read the comments of the noble Lord,
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Lord McIntosh, in Committee. He said then that he did not really like the amendments because of their general approach to the Bill, but that he accepted that there was a problem here which needed to be addressed.
The difficulty in which your Lordships' House finds itself now is that we have no idea how the Government think that this issue should be resolved. It is recognised by all parties that there is an issue here which needs to be resolved, but we have reached the last day of the Report stage on legislation which over many months has been under intensive discussion and consideration in another place and in this House; yet we do not seem to be any further forward on getting an idea of how the Government or the FSA think that this issue should be dealt with.
I think the very least that the noble Lord owes us tonight is a commitment to produce the Government's view on how this matter should be dealt with before we get to Third Reading. Nobody is going to pretend that specific amendments tabled by Opposition Members on technical issues are necessarily going to be all that they should be; nor that they should necessarily be incorporated into a complex Bill of this kind as they stand on the Marshalled List.
However, I do not think that anyone denies that the situation, if not resolved, will lead to a frustration of much of the work and functions of the panel. As a number of your Lordships have said, there are two ways in which the panel's proceedings could be frustrated. One is by the injection of uncertainty. If the say-so of the panel on a matter of dispute is not to be the substantive decision on that, uncertainty could be introduced. Delay is the other danger, and I feel that is the one that would actually be more frequently used. In the very highly charged circumstances of a contested takeover bid, one of the few weapons which the target may have is to spin out the matter in the hope of causing more uncertainty among investors.
It is not just the interests of shareholders which may be damaged by this, but also the interests of the market as a whole. The market's functioning can be damaged by prolonged uncertainty, particularly when major companies are involved, in a way which can actually lead to the opportunity for market abuse elsewhere. The doubt about the status of a transaction is one of the circumstances in which malpractice may appear.
We are all in this House absolutely committed to dealing with issues of market abuse. We realise that there is a potential conflict here between statutory powers of a reserve form in the hands of the Financial Services Authority and the need for speed and decisiveness by the panel in the heated circumstances in which it is called upon to operate.
This has been a very good-natured debate, but I should not want the Government to feel that the good nature with which the debate has been conducted means that there is not here a very serious issue which has not so far been dealt with and on which, by this stage in the Bill, we ought to have had much more specific guidance from the Treasury Bench. I hope that the noble Lord who responds will be able to give us at

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least greater insight into the Government's thinking on the way they will deal with this. Better still, I think it should amount almost to a minimum commitment that something very much more specific will made available to your Lordships before Third Reading. It may be that the suggestions of the noble and learned Lord, Lord Donaldson, could be built on by the Government and formulated in a way which would fit these particular circumstances. That something needs to be done is, I think, undeniable. I think that that is the feeling in all quarters of your Lordships' House. I very much hope that the Government will find it in them to speed up the consideration of this issue and that they will come forward with a workable solution.
Lord Goldsmith: My Lords, I do not want to detain your Lordships for too long. My sight of the Takeover Panel has principally come from my work as a barrister practising to some extent in a field where the Takeover Panel operates. As the noble Lord, Lord Boardman, has said, that has not included my being allowed to appear in front of the Takeover Panel. I hope that that sort of custom will not be allowed to extend to other bodies.
As a result of having seen the way the Takeover Panel operates, I recognise that it is an effective and most important part of the operation of the financial community. Therefore, having taken note of the concerns expressed by the panel, I have had concerns a bout whether, without some degree of clarification of the ambit and the respective areas in which the two bodies will operate, it may undermine the operation of the panel.
I am not sure that some of the concerns are necessarily expressed correctly; there may be more fear than there needs to be. However, I share the concerns of others who would have liked to see some agreement reached by which the respective functions of the two bodies would be clarified.
I agree with the noble Lord, Lord Newby. I do not see immediately enormous harm in Amendment No. 157YA. Under Clauses 116 and 118 the Bill already recognises that the authority may state in a code that certain behaviour described by it will not amount to market abuse. Under Clause 118 someone who behaves in the way described will be protected from a charge of market abuse. It might be said that it is already open to the authority, therefore, to issue a code in which, if it is of that opinion, it states that conduct which complies with the City code would not amount to market abuse.
If the authority is able to do that under the Bill as drafted, it might be argued that it is unnecessary to add this provision. On the other hand, it would send a clear message that that kind of behaviour would not amount to market abuse; and that would be helpful. As drafted, the amendment does not require the authority to reach that view; it gives it the power to state that in a code, and subject to such limitations as the authority thinks fit.
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I have more difficulty with the second amendment. I understand the argument raised by the Minister in Committee: that this would appear to give a non-statutory body the power to tell a statutory body what to do. I understand the objections to that course.
I shall listen carefully to what the Minister is able to say about the discussions to which he referred in Committee and to which reference has been made by other noble Lords today. I hope that at Third Reading some agreement will be forthcoming which will clarify the differences.
Lord McIntosh of Haringey: My Lords, it is clear that there is a great deal of common ground on the issue. That common ground was expressed most clearly by the noble Lord, Lord Saatchi, in introducing the amendments and by the noble Lord, Lord Newby. We all agree that the Takeover Panel does a good job in overseeing the procedures and practices of parties to takeovers. We have agreed that it is widely respected. That goes back for many years. We want the panel to continue to do that job in the effective way it has done so to date.
We agree also that there is some overlap between some of the things the panel does and the territory covered by the new market abuse regime. However, equally clearly, that can be dealt with in the same way as other overlaps—for example, between the market abuse regime, the rules of recognised investment exchanges and clearing houses and between the ESA's role as prosecutor and that of the other prosecutors.
There is nothing inherently special about the position of the panel compared with exchanges that makes us feel that a different approach is warranted here. This is not a new concern. Overlaps exist at present between regulatory rules and some criminal offences and the rules of the Takeover Panel, exchanges and other regulatory bodies.
Where issues arise, they are dealt with at present through policy statements, practical arrangements, liaison and information sharing. There has been no difficulty about that to date; and I see no reason why there should be particular difficulty. However the panel—perhaps I may say to the noble Lord, Lord Stewartby, that it raised these issues only in the past few months, and not during the early stages of the Bill—fears that the fact that the new market abuse regime is a statutory regime will change matters. It fears that because the regime is statutory it will be easier for aggrieved parties in a hostile takeover to seek to involve the FSA in an effort to frustrate the takeover. Those parties, the argument runs, will find it easier than now, with regulation currently being largely on a contractual basis, to seek judicial review in circumstances in which the FSA decides not to respond to a request that it should consider exercising its powers under Part VIII of the Bill at a time when a takeover is in progress.
In theory, there may be something in that argument (as Wittgenstein might have said) but not in practice. It is the case that the FSA cannot bind itself never to

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consider whether it should take action under Part VIII of the Bill when a bid is in progress, but it would not be appropriate for it to do so.
I was interested to hear the explanation of the noble and learned Lord, Lord Donaldson, of judicial engineering in the Datafin case. The attitude of courts to the Takeover Panel and the takeover code is well known. They have not said that they will never intervene while a bid is in progress. They have indicated that the circumstances in which they would be prepared to do so would be very rare indeed. With great respect to the noble and learned Lord, I think that is the solution for the Takeover Panel. I believe that it is possible to do that. It is open to the FSA to adopt a similar attitude to that which the courts have adopted without running the risk of fettering its discretion in an unacceptable and irreversible way, and that is what the second amendment in particular does.
Lord Forsyth of Drumlean: My Lords, I am handicapped because I am not a lawyer. However, can the Minister deal with this specific point? If the FSA were to act as he suggested—that is, not to intervene—the argument runs that it would then be vulnerable to an action for judicial review because it had not examined the circumstances of a particular case. That would lead to delay and the kind of problems which have been described.
Lord McIntosh of Haringey: My Lords, I have the same handicap as the noble Lord. I am not a lawyer either. I plan to come to that later.
The point I make here is that the policy that the noble and learned Lord, Lord Donaldson, called masterly inactivity is as open to the FSA as to the courts. The fact that it cannot run the risk of fettering its discretion does not mean that it cannot refuse to intervene in tactical matters, and say so in advance. It would be wrong if parties to a bid and others involved in it could circumvent the clear position which the courts have adopted through the back door of the new regime in Part VIII of the Bill. The courts would not look kindly on any attempt and would look favourably on any effort by the FSA to avoid that happening.
The effects of Amendments Nos. 157YA and 157ZA would be, first, to allow the FSA to provide effectively that in the area of takeovers market abuse is whatever the Takeover Panel says it is; and, secondly, to allow the FSA to adopt a policy that it will intervene only in certain areas of market abuse where the panel invites it to do so. Thirdly, they appear to attempt to avoid the panel being in any way publicly or legally accountable for anything it did or failed to do in the course of discharging the wide-ranging functions that the amendments would by implication bestow on it.
These are serious charges about both amendments. However, I want to emphasise that the two amendments are conceptually different propositions. Amendment No. 157YA is concerned with the status of the City code and the question whether compliance with it constitutes market abuse. On the last occasion,
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two amendments covered both safe harbours and discretion as to who should take action. We rejected them. But we rejected them—it is important to note—for the same reason. As a matter of principle we do not agree that the FSA should be able to fetter its discretion in this way.
Returning to the point raised by the noble Lord, Lord Forsyth, the issue is not whether it would be subject to judicial review if it fettered its discretion; it would be reneging on the duties which will be given to it by statute in the course of the Bill.
Amendment No. 157ZA is concerned with the circumstances in which the FSA can take action where an abuse which has contravened the code occurs. It is about who takes decisions, and not, like Amendment No. 157YA, about whether the behaviour is abusive.
My concerns as a matter of principle are obvious. If the FSA agreed to "turn on" these provisions, as it would in the first line of the second amendment, the effect would be to give the Takeover Panel, a non-statutory body which is not subject to accountability or transparency arrangements comparable to those of the FSA, powers over the FSA which neither the Treasury nor Parliament has. Treasury Ministers cannot tell the FSA when something is abuse or when it is not. The definition of abuse is provided for on the face of the Bill in Part VIII.
Let us remember what we are doing in this Bill. We are setting up the FSA as the single statutory regulator of the financial services industry. What it does is conditioned by the objectives and principles which Parliament is giving it, among them the protection of consumers and the maintenance of market confidence. In the area of market abuse, we are giving it new powers to protect the financial markets, extending its reach to cover both regulated and unregulated persons. Together with that, it has statutory investigation powers enabling it to compel people to answer questions.
The Takeover Panel, however good a job it does in regulating the conduct and process of takeover powers—and we are all agreed about that—is a very different body. It is not subject to the statutory checks and balances; for example, it is not subject to consultation requirements, cost-benefit analyses, annual reports, independent complaints investigations and so on.
There are good reasons for maintaining the current non-statutory approach to the regulation of takeovers. We want the process to be as quick and efficient as possible. But where market abuse is concerned, the last word should rest with the body to which Parliament is giving the job of tackling the problem. Only in this way will we ensure that there is consistency and coherence in the regime.
We have to remember that interests other than those of shareholders in the various parties to a takeover are at stake. There is the interest of other market participants and the market as a whole, where concerns of fairness and efficiency are at the heart of what we are doing.

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Furthermore, there will be times when it is appropriate for the FSA to take action against market abuse during a takeover. The amendments recognise that—there is no disagreement about it—as has the panel in its talks with us. Examples might be where the abuse was very serious and affected companies other than those involved in the takeover or where a party to a takeover did not comply with a panel ruling.
Given that all sides acknowledge that there will be occasions when it is appropriate for the FSA to take action under its market abuse powers, the key question is who should take that decision. I believe firmly that the decision in a particular case should rest with the statutory regulator which Parliament has charged with the responsibility of tackling market abuse across the board.
I cannot accept that it is right for the FSA to be able to adopt a policy of only ever exercising its market abuse powers where a takeover is involved on the say-so of the panel. Apart from the point of principle, as a practical matter it would not be desirable for the FSA to be able to take action only at the request of the panel. The panel may not always be in possession of the facts because it does not have the direct statutory investigation powers.
However, I have been properly challenged about what the practical solution to the problem will be. I believe that it has to be, and would be if the amendments were carried, administrative arrangements; in other words, agreement between the Treasury, the FSA and the panel. As is well known, the Treasury has been brokering meetings between the panel and the FSA and I want to report on what has happened during those meetings.
There are three important factors. We have made a great deal of progress, although we have not yet completed the process. The first is a policy statement setting out the FSA's general policy in relation to takeovers. While the FSA cannot adopt a policy of never intervening regardless of the circumstances—any more than the courts can—as that would be unlawfully fettering its discretion, it can adopt a policy of not intervening generally where it feels that the panel can take adequate action. We are assured by the FSA that it will do so. That is my answer to the question posed by the noble Lord, Lord Saatchi.
I now return to the question asked by the noble Lord, Lord Forsyth. The FSA can adopt general policies to which it must be prepared to make exceptions. If the case in question does not warrant an exception being made to the general policy, a judicial review will not succeed. Of course proceedings for review may be brought, as they may be brought against the panel, but in a case such as the one I have mentioned it is unlikely that the courts will grant the necessary leave for an application to be made.
The discussions could involve a general policy of the FSA not intervening in response to a request which it believes has been made for tactical reasons and not because of the concern that serious abuse has taken place. Again, that is in answer to the concerns expressed by noble Lords opposite. That is the first front.
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The FSA is currently working with the panel on a statement which will provide as much clarity as possible on the kinds of cases in which it would seek to intervene. These will be the more serious and urgent cases involving widespread abuse which goes across sectors or involves other parties than the parties to the takeover. The FSA's intention is that the statement of policy will address issues of timing, a delay in the exercise of certain powers and whether to impose a penalty until after the completion of the bid process.
The second front is the code of market conduct provided for in Clause 116. The FSA is required to produce a code which gives appropriate guidance to those determining whether or not behaviour amounts to market abuse. The FSA is working with the panel, as it is with recognised bodies, to identify rules which are capable of providing such a safe harbour.
Finally, the FSA and the panel are working on an operating agreement setting out clearly the arrangements for the sharing of information, liaison and co-operation.
I was asked particularly by the noble Lords, Lord Newby and Lord Elton, why there appeared to be no urgency in the process. There certainly is urgency in the process. There are strong incentives for both the main parties in the negotiations to make rapid progress against a background of uncertainty as to whether the Bill would be amended. I believe that if the House is established in the view that an amendment on the face of the Bill is not the best way forward, that will help progress to be made in the negotiations. I will ask the FSA to produce a position paper before next Thursday—before the Third Reading of the Bill—for circulation to all noble Lords who have shown an interest in the matter. As I have said, the FSA is currently working on a policy statement, operating agreement and code of market conduct for safe harbours.
I am sure that those arrangements are the right way forward and provide a satisfactory solution to the problem. Under those circumstances, I cannot agree that the amendments, which are separate and not consequential on each other, would be helpful in the negotiations or would help us to reach the agreed conclusion which is necessary for both the Takeover Panel and the FSA, and I ask the House to reject them.
7.38 p.m.
Lord Saatchi: My Lords, I am grateful to my noble friends Lord Forsyth, Lord Boardman, Lord Elton and Lord Stewartby for supporting the amendments and also to the noble Lord, Lord Goldsmith, for supporting Amendment No. 157YA.
The summary of what the Minister said is that we are promised a position paper from the FSA before next Thursday. That appears to be the action that will follow from today's short debate. However, as some of my noble friends said, that is not what we are looking for at all. We are looking for a view from the Government about how they will resolve a pressing problem—which was pointedly described by the noble Lord, Lord Newby—that we have before us two

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critical regulating bodies which have an overlap in their regulatory powers. That is bad enough and is not good organisation. But what is worse is that in the overlap they have already disagreed on fundamental aspects of their respective roles. I believe that that is why the noble Lord, Lord Newby, and other noble Lords said that we need an agreement on the circumstances in which the FSA would intervene directly over the head of the Takeover Panel.
In, I believe, a most important intervention, the noble and learned Lord, Lord Donaldson, said that such an agreement could not be achieved because too many circumstances were involved. I believe that he said that he preferred our amendment which (he said in a striking phrase) gave the FSA the power to apply with "masterly inactivity". I believe that that is why he preferred our amendment to any possible agreement. However, either by way of an agreement brokered by the Treasury or by way of agreeing to these amendments, the Government will surely offer the House at Third Reading more than the position paper from the FSA.
The Treasury is responsible for the situation that we are about to enter. I hope that one way or another it will find a solution before Third Reading, either via our amendment or via an agreement. As an inducement to the Treasury to try to find such an agreement, I hope that it will reflect on the fact that if it does not, then—perish the thought!—the decision might be taken by votes in your Lordships' House. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 157ZA not moved.]
Clause 155 [Interpretation]:
[Amendment No. 157A not moved.]
Lord McIntosh of Haringey: My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, may I suggest that the Report stage begins again not before 8.42 p.m.
Moved accordingly, and, on Question, Motion agreed to.

Clothing and Textile Industry
7.42 p.m.
Lord Feldmanrose to ask Her Majesty's Government whether the state of the British clothing and textile industry is satisfactory.
The noble Lord said: My Lords, I welcome this opportunity to discuss the state of the clothing and textile industry today. In the time available tonight, I shall deal only with the clothing industry.
I have never had a financial interest in the industry, except as a long-term sleeping shareholder in one of London's leading men's tailors. My abiding interest is an affectionate and sentimental feeling for the clothing industry since 1978.
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In late 1978 the noble Lord, Lord Healey, then Chancellor of the Exchequer, invited me to become chairman of the clothing Little Neddy. I rang his office to ask whether he had made a mistake because I knew nothing about the industry. He replied that he wanted me to accept because, it was hoped, I could bring some new ideas to the industry. I accepted willingly and was quite intrigued to do so because at that time I was chairman of the Conservative Party in Greater London and was one of the people trying to bring the party back into government.
At Little Neddy meetings the manufacturers, industry unions, some retailers, trade associations and DTI officials all worked together to get down to basics. Being on the Little Neddy gave me the opportunity to be in direct contact with the industry unions, and I remain in contact with them today.
When I took over in 1978, I wrote a report which I called St Neddy. It included some of the following points. The British clothing industry had in recent years suffered from falling employment, fluctuating or falling production and large increases in the volume of imports. Increases had occurred in low-cost imports but also in high-cost imports from advanced manufacturing countries. Those goods appeared to outscore British-made goods in design, manufacture and marketing. We said that we should aim to encourage professional standards of management in the UK clothing industry, and encourage new entrepreneurs and small businesses.
I spent six interesting and exciting years as chairman of the clothing Little Neddy. During that time, we came up with many ideas, including encouraging some of the leading haute couture designers to work together with retailers in putting better design into the high street. That initiative eventually turned into the British Fashion Council. We attempted to launch a design, branding and marketing project. We tried to set up a British fashion centre in premises in the heart of London so that export buyers and major UK buyers could see virtually the whole of the British clothing industry in one stop. We held numerous meetings to bring together retailers and manufacturers so that they could discuss problems and learn from each other.
In 1982, growing job losses which arose from growing imports led us to establish a "Better Made in Britain" exhibition for clothing, knitwear and footwear. At that exhibition in 1983 40 major high street retailers exhibited their imports and challenged UK manufacturers to obtain the business, not out of patriotism but by strict commercial criteria of competitiveness of design, quality, price and availability.
The initial exhibition was a great success and "Better Made in Britain", which I later chaired as a separate organisation from 1984 to 1995, went on to run 25 exhibitions, some of them for clothing, in 14 different industries. We claim that we brought back for Britain many hundreds of millions of pounds of business and hundreds of jobs.

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We also dealt with inward investment. We arranged for the largest ever group of Japanese manufacturers to visit Northern Ireland. We worked together with the Northern Ireland Development Board and discussed further with the Japanese people the possibility of opening factories there. One or two of them did. We also encouraged clothing retailers from GB to buy from the Province.
A year ago, I joined the All-Party Parliamentary Clothing and Textiles Group. It produced a report which made many of the same points as I first made some 21 years ago; namely, that the industry currently faces the biggest challenge in its history, that low labour-cost suppliers are securing an increasingly large share of world markets, that state aids are distorting competition and that sourcing patterns on the high street are changing.
Textile and clothing represent the eighth largest manufacturing industry in the UK. It is a major employer in the East Midlands, Yorkshire, the Scottish Borders and Northern Ireland, with a presence in the north and east of London, parts of the West Midlands and the North West. Perhaps I may give some statistics about clothing. In comparing those areas between 1986 and 1999, production in the industry increased by only 8 per cent. Exports grew from £1.2 billion to £2.5 billion. Imports grew from £2.3 billion to £7.5 billion; that is, they more than trebled. The trade gap grew four-and-a-half times from £1.1 billion to £5 billion. Jobs, both in clothing and textiles, fell from 600,000 in 1981 to 300,000 in 1999 and are currently falling at the rate of 30,000 per annum.
In the past five years, 1,300 clothing firms and 400 textile firms have gone out of business. It is clear that unless positive action is taken soon, there will not be a viable industry left in 10 years' time. That would be a tragedy for our country. Today's retailing environment is more challenging than ever before. Retailers are under greater attack on margins and often have to make a trade-off between speed of delivery and price. Design is, and always was, the key. However, if we improve our design and quality so that domestic production becomes a necessity rather than simply an option, that must surely help.
It is clear that more and more basic clothing is being bought from abroad. In the past 10 years, imports from Hong Kong have trebled. Those from Turkey have increased 14 times; those from China 20 times, and even those from major European countries by 350 per cent. Wherever one looks, retailers and UK manufacturers are buying more and more goods from abroad; from a range of low-wage countries which, in the 1980s and early 1990s, were regarded as being unreliable producers.
It is not only a question of retailers buying from abroad; clothing manufacturers themselves are setting up overseas plants. In other words, UK jobs are being exported to those countries. The effect of all that will not only harm our clothing industry directly but will also harm the support industries.
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In recent months, large government grants have been allocated to the coal, motor car and aerospace industries. But unless help is given to the clothing and textile industry, I feel that we shall lose a further 100,000 to 150,000 jobs in the few years ahead. We shall then wake up and ask why we did not do something about it earlier.
Government aid to the clothing industry has been given mainly through regional selective assistance. It has been run at a low level of £4 million to £5 million per year. That assistance should now be reassessed and should be run on a national as well as on a regional basis.
I should add a few words about Marks and Spencer which has unfairly had to take the brunt of the criticism for what has happened to the British clothing industry. From my personal experience I can say that Marks and Spencer carried the industry through many difficult years by buying British, and the clothing industry would have been damaged 10 to 15 years ago had it not been for its help. That should never be forgotten.
I conclude by proposing, first, that the national strategy proposed by the textile and clothing strategy group should be approved en bloc by the DTI and that the necessary money be allocated right now.
Secondly, the DTI should investigate in depth and at speed the way in which Zara, a highly successful Spanish retailer, operates. It has over 700 stores in Spain and Europe and has recently opened several here in the UK. I understand that two-thirds of the clothing sold in the stores is made in Spain. I understand that it chooses the fabric, cuts it and gives out the work to local factories near its head office. I suggest that we send a mission to its headquarters to see what we can learn and how we can adapt its ideas to our country.
In some ways, what it is doing reminds me of the Nissan operation set up in Sunderland where the main factory and its components suppliers were on the same campus.
Thirdly, the GMB union is keen on a 'Made in Britain" label. That could help. However, it would help even more if it could be applied to a branding, marketing and advertising campaign with a brand name for quality British goods. Fourthly—and I paraphrase another expression—we need "design, design, design" with a major initiative for young designers and also to attract experienced designers to the industry.
Fifthly, we need to look at the burden of legislation, the climate change levy, parental leave and other matters which add further costs to the industry at this difficult time. We need to look again at providing more financial support for our exhibitors at overseas trade fairs.
Lastly, we need to look at sourcing in the UK more of the NHS spend of £130 million, the MoD spend of more than £100 million and relevant business from other government departments. There was recent publicity about MoD contracts going to a German company which was manufacturing its goods in

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Turkey. I should welcome the opportunity of discussing some of those ideas with the DTI at ministerial level and to offer what assistance I can.
In conclusion, I hope that the Government will do their best to help save the clothing and textile industry from disaster in the years ahead. I look forward with interest to contributions from other noble Lords and with hope to the Minister's reply.
7.53 p.m.
The Earl of Mar and Kellie: My Lords, I am grateful to the noble Lord, Lord Feldman, for tabling this Unstarred Question and hence giving us the opportunity to debate this issue. I shall be speaking mainly in a Scottish context, believing that that subject is a matter partially reserved to the United Kingdom Parliament.
Just before I was sent home last November, I began to realise as a consumer that the UK textile and clothing industry in general and the Scottish industry in particular were coming under considerable threat from imported goods. That awareness came from various sources. First, in Clackmannanshire, many textile firms have closed in the past year. That culminated in the final closure of the Paton and Baldwins hand-knitting wool factory in Alloa. In all, 1,000 jobs disappeared in a year.
Secondly, I became increasingly aware of the special context of clothing in Scottish culture, particular for men. Never before have I seen so much flamboyance among the normally shy and retiring Scottish males. Despite their reticence, my fellow Scots have the only workable national dress in Europe.
Thirdly, I began to realise that in the remote areas of Scotland there are products which are worthy of promotion. The issue of the protection of geographic indication—the so-called PGI—is clearly raised in this regard. The Shetland Islands have a long tradition of knitwear which, when combined with the Fair Isle tradition, not only forms a substantial part of Scottish culture and heritage but also has been protected since 1986 by the symbol of the "Shetland Lady" mark. The Shetland knitwear industry contributes £8 million per year to the islands' remote economy.
Similarly, the Harris tweed industry continues to contribute to the even more fragile and remote economy of the Outer Hebrides. Harris tweed has been protected for many years by the "Orb" mark. Sometimes criticised for being too conservative, it is now being produced in a wider range of weights and styles. Perhaps its greatest virtue—that it seems to be virtually bomb-proof—is also its great weakness. Plenty of people bought a Harris tweed jacket years ago and, yes, it is still doing fine.
I was pleased to receive a letter from Kim Winser, the new chief executive of Pringles of Scotland. She was keen to point out that Pringles has every expectation of building up its knitwear business in Hawick. I applaud that, especially as the Scottish Borders have been very hard hit by the closures in the face of international competition.
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So, where does that get us to in Scotland and in the United Kingdom? It is an industry to which most consumers can relate. Individuals can make purchasing decisions. By contrast, noble Lords and, indeed, other citizens cannot go out to buy a ship from the Clyde or a jet aircraft. Our very temperate climate requires us all to have a range of clothing to meet the variety of weather with which we are blessed. My point is that individuals can opt to buy Scottish or UK-produced clothing.
Clearly, it will be cheaper to buy goods from abroad, especially from the third world. I do not decry supporting the third world. Indeed, it is generally a duty which we should take upon ourselves. I recently bought a cap. The material was Harris tweed and it was assembled in Sri Lanka. That admirably met both my objectives.
So I believe that the UK industry must concentrate on the quality end of the market, but not just the luxury end of that market. It should produce distinctive material and style; make certain that the label says precisely where it is made; and trade on that indication. It should not just say "Made in Scotland" when in fact it is made in Brora, Selkirk, Sauchie, Alva, Stornaway, the Isle of Sanday or Shetland.
Penultimately, all consumers need to be reminded that the industry is subject to the slogan, "Use it or lose it". Ultimately, we should promote the idea that we are the ethnic people of the North Sea or the eastern Atlantic and that, as such, we have a distinctive heritage and tradition of dress which is worthy of our own support as well as that of those who visit our shores.
7.59 p.m.
Lord Rogan: My Lords, it is a pleasure to follow the noble Earl, Lord Mar and Kellie, and to welcome him back to the House as an official working peer.
Today's challenge and tomorrow's opportunities may best describe the collective position of the textile and clothing trade today in the United Kingdom. I have been involved in the textile business all my adult life. Indeed, my memories go back even further. I can recall, with pleasure, as a child playing hide and seek in webs of cloth in my father's cloth store. Today, I have interests in the yarn spinning and yarn processing businesses in Northern Ireland, England and in mainland Europe. While, undoubtedly, "niche" businesses within the textile industry are fairing well, collectively the industry would say that over the past three decades it cannot recall a time when the overall environment was beset by the scale of restructuring and refocusing currently upon us.
Some noble Lords may also be aware that I have an involvement in a public relations company. My experience in that industry, added to a healthy cynicism engendered from my time in politics, has taught me not to believe everything that I read in the press. If I did, I would believe that the textile industry and the clothing industry in this country had gone for ever, never to return. The reality is that the column inches devoted to recent problems do not tell the complete story.

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As the noble Lord, Lord Feldman, pointed out, the textile industry is fragmented around the kingdom and its success or failure has profound effects upon regional economies. Perhaps I may concentrate on the Northern Ireland region, which I know most intimately, to illustrate the core problems for the UK-wide industry and to identify what I feel are the solutions to those problems. If I refer to some of the more well-worn facts, you will see what I mean.
The textile and apparel industry in Northern Ireland is exclusively responsible for 20 per cent of all employment in Northern Ireland's manufacturing output, as compared to just 8 per cent of the total manufacturing output of the UK as a whole. Similar ratios apply to other textile regions in Great Britain.
Textiles account for over 20 per cent of the Northern Ireland economy's entire overseas exports. That is even more critically important to regions within Northern Ireland, such as the North West, where over 50 per cent of manufacturing jobs depend on the textile sector. Clothing and textiles contribute in excess of £1 billion in revenue towards the Northern Ireland GDP. The industry employs over 20,000 people in a population of 1.5 million. I hope you will forgive the hyperbole: textiles maintain the industrial heart and soul of Northern Ireland.
Those factors apply equally to the other textile regions of the UK, many of which are clustered in already disadvantaged urban and rural areas. From a position of stability and comfort in the mid-1990s, the UK clothing and textile sectors have been browbeaten by a sequence of market forces and consumer trends that have been as damaging as they have been relentless.
They say a week is a long time in politics. Recently, I have experienced many long weeks and hours in local politics, but nothing quite measures up to the prolonged sense of ardour experienced by all those who trade, globally or domestically, in our clothing and textile industry. From 1995 volume output from the sector has dropped 10 per cent and continues to fall. Employment has dropped some 20 per cent, a figure that resonates concern among all political representatives because of the dominant employment exposure that some regions have to the textile industry compared with others.
The introduction of the euro has been instrumental in leveraging an ever-strengthening pound. The impact on exports to Euroland is nothing short of catastrophic. If difficult fiscal conditions are combined with unpredictable high street consumption, a volatile Far East market and cheap labour driven imports, no one can be left in the dark as to the harsh reality of trying to make a profit in the industry today.
What of tomorrow? Forces of change are shaping the textile industry of tomorrow. We must re-invent our wares and the means by which we assemble and sell them if we are not to be replaced in an inevitable one-market economy. I believe that we have the fundamentals with which to do that.
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Last year the top 10 companies in Northern Ireland outperformed both the Republic of Ireland and Great Britain counterparts, each of which is growing rapidly, That was done based on modern design themes, new technologies, brand development and balanced outsourcing strategies. Companies like Desmonds, Ulster Weavers, Ewart Liddell and Ulster Carpets, to name but a few, are sound, profitable enterprises. If the transition period is to be endured without permanent discord, we must now mobilise ourselves to prepare for a new kind of industry. We must begin to develop new skills in logistics and purchasing. We must exploit the fact that our closeness to our current markets allows us quicker response tune than competitors from overseas.
We must also look for new routes into global markets. We should develop supply and out sourcing partnerships to reduce costs, to remain competitive and to remain profitable. That would enable us to maintain a base and employment in our UK mills, albeit at lower levels. We are finding new opportunities in joint ventures, combined marketing initiatives and networking visits. Competitive and commercial advantage will return to those businesses that embrace new systems and models of business.
The creativity and design flair emerging from local colleges needs to be given access to the cutting edge of new product development. The Internet and e-commerce must become essential elements of the: selling and marketing process so that we can take prominence in a global shop window that holds as much opportunity for United Kingdom manufacturers and producers as anywhere else in the world.
The way forward for our industry is now to allow for a period of subsidised transition to follow its course. Once regeneration is firmly under way, all of our businesses should look to turn prevailing market forces to our advantage and reassert the United Kingdom's position as a leading global provider of value-added, well-branded and high quality textile and clothing products. Given a fair wind and government support, I am confident that that is a position that the UK clothing and textile industry can achieve in the, short to medium term.
8.8 p.m.
Baroness Miller of Hendon: My Lords, I thank my noble friend Lord Feldman for introducing this important and timely debate, bringing with him his considerable experience in this area and enabling other noble Lords to speak from their experience.
In the centre of this Chamber is the Woolsack, a symbol that dates back to the 14th century, illustrating the importance of wool to our economy. In these days, when the history of our country is no longer taught as it was when I and most of your Lordships were at school, with the emphasis on British achievements, I imagine that the average school child, on being asked what a "spinning jenny" was, would guess that it was a member of a girl's pop group.

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But in the 18th century the whole of the world's textile industry was revolutionised by three major British inventions: the spinning jenny, the mule and the flying shuttle. The great inventors, Sir Richard Arkwright, Samuel Crompton and John Kay, were largely responsible for the great wealth that the production of textiles generated for Britain and also inspired a whole engineering industry which led the great Industrial Revolution that made Britain a world power.
And yet into what a parlous state our once great textile and clothing trade has fallen. In Victorian times it was the country's largest employer and the world's largest producer. Although Britain was once a world leader, between September 1998 and September 1999, some 36,000 textile and clothing workers lost their jobs. That represents some 650 jobs a week.
The British Textile and Apparel Federation has said that there is every sign of more than 30,000 losses this year and up to 100,000 over the next four years. These losses have largely been in packets of 50 or so here and 100 or so there. Each job lost is a personal tragedy in its own right but goes largely unnoticed nationally.
But imagine what a furore there would be if these job losses, running into thousands—as is threatened in the motor industry—were announced on just one day? However, they also form part of a pattern. Since May 1997, some 250,000 jobs have been lost in manufacturing industry, which represents a loss of 10 an hour. That has happened under the rule of a party which in its election campaign had the effrontery to accuse the Conservatives of destroying this country's industrial base.
The honourable Member for Amber Valley introduced a most instructive debate in the other place on 14th March in which she stated:
"The Government must stop writing off the industry. They must accept and believe that it is not just a sunset industry".— [Official Report, Commons, 14/3/00; col. 2WH.]
Indeed it is not.
As my noble friend Lord Feldman reminded us, the entire sector of textiles, clothing and footwear is still the eighth largest in the United Kingdom. It has sales in excess of £17 billion and currently employs 306,000 people. One quarter of those jobs are concentrated in the East Midlands. However, although the industry is larger than agriculture, the motor industry and aerospace, it receives only a fraction of the assistance that these and other smaller industries get.
The problem is largely, if not entirely, caused by large volumes of imports from countries with very low labour costs. Ironically, Britain, among other countries, helped to set up textile factories in emerging third world agricultural countries as an easy means of creating industry. As Clare Booth Luce once said,
"A good deed never goes unpunished".
However, it is not only the low labour costs and low infrastructure expenses in these countries that cause the problem. There are some self-inflicted wounds that the Government have caused to industries struggling
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against third world competitors. The British Apparel and Textile Confederation wrote to one of my researchers to say,
"The legislative burden is growing. We certainly do not need an increase in the national minimum wage this year, nor do we need the climate change levy, nor payment for parental leave, to name but three".
Exchange rates are also having an effect. I do not believe that it is the strength of sterling that is causing the problem. The value of the pound against the dollar has remained more or less constant since January 1999. But the weakness of the euro makes our exports to Europe comparatively expensive and imports from there comparatively cheap. A few years ago we had a trade in balance with the EU, whereas last year it was £6 billion in deficit.
There has been a great deal of criticism of Marks and Spencer for its shift from its "Buy British" policy. At one time, and for many years, the company proudly proclaimed that 99 per cent of its goods were manufactured in Britain. What a big boost that was to the British textile and clothing trade. Some 16 per cent of United Kingdom textile sales are made through Marks and Spencer.
Now, large volumes of the company's goods are purchased from abroad and some of its manufacturers are being encouraged to move their production to other countries. My noble friend Lord Feldman reminded us of that point. I am not here to act as an apologist for Marks and Spencer, but, as my noble friend also pointed out, it is not a part of Marks and Spencer's responsibility to subsidise the British textile industry by overpaying for the goods it wishes to purchase. That may sound brutal, but the company has two main duties: one is to its shareholders to operate in a profitable and efficient manner without infringing ethical rules; the other is to ensure that it does not damage its own business and so put the jobs of its workers at risk. Unfortunately, it seems that Marks and Spencer can survive in a highly competitive market only by buying much of its supplies from overseas, as indeed do many other retail chains operating in this country.
Then there is the matter of sourcing of goods by Her Majesty's Government. Some £1 million worth of waterproof jackets for the Navy have just been purchased from Germany. A further £6.5 million worth of combat kit for the Army was also purchased in Germany, putting 100 jobs at risk in Cumbernauld. One hundred and twenty thousand camouflage jackets and trousers were purchased from Belgium. Army boots were ordered from Brazil, forcing the closure of the last footwear factory in Wales, with the loss of 65 jobs.
The excuse for the German uniform deal was that it offered "best value for money". However, "best" according to what convoluted criteria? The Ministry of Defence has saved some unknown but obviously trivial amount compared with what the goods would have cost if they had been purchased from United Kingdom manufacturers. However, the hidden costs to the Treasury will be the unemployment pay and social security that will have to be paid to the hundreds

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of British employees thrown out of work, along with the cost to local communities dependent on the factories where they work.
The spin doctors of Millbank claim that we now enjoy the benefits of "joined up" government. If the Ministry of Defence cannot understand the dire and expensive consequences of this piece of penny-pinching, then I doubt if it is even capable of understanding, never mind joined-up government, but joined-up writing! Instead of state aid, what we see in the examples that I have cited to the House is state sabotage.
Can noble Lords imagine the reception that a British manufacturer of the same kinds of uniforms would get if it tried to sell its goods abroad? It would be told, "Why should we purchase from you when your own Government will not do so?" I wonder how many uniforms were purchased from abroad by the German and Belgian armed forces?
In Germany, the Belgian money is funnelled into its textile industries via regional and state governments, while Italy supports the industry in the poor south by government subsidies. From 1996 to 1997 regional support for the industry was £12.5 million. In 1997, under the present Government, that support fell to £5.86 million. It now stands at a paltry £4,175,000.
The next problem is that of dumping. Apart from cheap imports, we are also faced with the problem of illegal imports. Paul Gates of the National Union of Knitwear, Footwear and Apparel Trades complains that illegal imports are not being clamped down on. That includes forged designer goods.
That brings me, in conclusion, to the recommendations made by the Textile and Clothing Strategy Group which was set up by the Government. It has produced some 25 recommendations. My noble friend Lord Feldman suggested that they should be adopted en bloc. Briefly, those recommendations include working with retailers to establish more efficient supply chains; integrating United Kingdom design talent and exploiting technical expertise resources; promoting the United Kingdom's reputation for quality and excellence; and strengthening marketing skills.
On 30th March the Minister for Competitiveness told the other place that the Government were, "considering these recommendations carefully". Perhaps I may ask the Minister: are they doing so? Furthermore, can the Minister tell noble Lords when the results will be available? In my view, and I believe in the view of all noble Lords, it could not be more urgent at this time.
8.18 p.m.
The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, I am delighted that the noble Lord, Lord Feldman, has given us the opportunity to debate this issue. The textile and clothing industry occupies an enormously important place in the UK economy and is of particular importance as an employer in some of the most hard-pressed parts of our country. The noble
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Lord made that very clear, as did the noble Earl, Lord Mar and Kellie, who described the situation in graphic detail. Like him, I have a particular affection for the industry, having for some time been the owner of a small clothing company that made children's frocks for M&S. I have also seen this from the viewpoint of being a small manufacturer dealing with a large retailer, which was extremely good for the soul, if not for the pocket.
There is no point in denying the fact that the clothing and textile industry is going through a tough period. There is no single reason for it. The increase in competition from low-cost supplier countries clearly plays a part; the purchasing policies of major retailers has had an impact; export-dependent companies face difficulties, not least because of the weakness of the euro. There are other reasons, too.
The competition from low-wage countries is long term—undoubtedly the most important factor in the labour-intensive parts of the industry—and is the reason why we are not the only country which has seen a contraction in its textile and clothing industry. Germany and France are in a similar situation, though Italy has survived remarkably well due to its strengths in design, marketing, investment and collaboration. There is a lesson to be learnt in that; that is, that those are the routes by which we can regain the competitive edge against low-wage countries.
As the noble Lord, Lord Feldman, made clear, major new countries are entering the industry, and countries like Morocco are having a major impact simply because they pay wages that are one-tenth the level of ours. That makes it extremely difficult to compete in a labour-intensive market. However, let me say to the noble Baroness, Lady Miller, that we do not regard the textile industry as a sunset industry. There are ways of combating that kind of competition, but it requires a high level of management skill and creativity.
We must accept that those factors will not go away and the only way that we can achieve success and a prosperous long-term future for the industry is by increasing its value added. This means improving marketing and design; increasing the level of skills in the industry; improving supply chains; harnessing better technical expertise and moving into areas of growth such as technical textiles. Those arguments apply to all regions of the country, even those that are the most dependent on the industry.
Those factors are some of the areas being addressed by the national strategy for the UK textile and clothing industry, which is being prepared by the industry-led Textiles and Clothing Strategy Group. That is an impressive body. It is well-representative of the industry and is industry-led. However, DTI Ministers encourage the work of the group and provide it with secretariat resource.
It is important that the group should be industry-led because we believe it is only the industry which can understand and solve the problems. As I understand the situation, the Textiles and Clothing Strategy Group is revising its strategy report in the light of

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comments it received from various parties interested in its consultation exercise. Altogether it received more than 50 written responses and I expect it to publish its final report shortly.
It is premature for me to offer responses to specific recommendations until the report is published and I cannot commit en bloc to those recommendations. But it is an impressive document and I can assure the House that the DTI Ministers will respond positively to the recommendations once they have been finalised. We have made sure to keep closely in touch with the group's work and my colleagues—the Secretary of State for Trade and Industry, the Minister for Small Business and E-Commerce and a Parliamentary Under-Secretary of State for Competitiveness—attended meetings of the group. The DTI Ministers will be meeting the group again soon to discuss the recommendations once they have been published.
The report is impressive in that it tackles the issues at the heart of the competitive industry—issues such as education, training and skills. One of its recommendations—taking the point of the noble Lord, Lord Feldman—relates to learning and best practice in manufacturing and retailing overseas. He mentioned a Spanish retailer in this context. We are actively considering how to take that point forward because, like him, we believe it is important to learn from best practice, particularly the sort of "just-in-time" manufacturer that he mentioned.
The report also highlights the importance of increasing added-value through increasing the design content of products, strengthening branding and exploiting high value niche markets. Those are all concepts about which the Government are extremely enthusiastic and the noble Lord can be assured that we shall do everything we can to promote that agenda.
Although the textile and clothing industry is part of the UK's traditional manufacturing base, it is nevertheless an industry driven by constant innovation. The DTI is working on a number of fronts to ensure that the wealth of talent and innovation in this country is more effectively engaged with the textile and clothing industry. For instance, we are working with the DfEE and the national training organisations for textiles and clothing—the National Textiles Training Organisation and CapitB—to develop an integrated national strategy for liaison between further and higher education and the industry; to directly influence and provide positive guidance to pre and post-16 school pupils while at the same time providing a two-way education channel between education and industry; to improve the calibre of entrants to SMEs in the apparel manufacturing industry; and to strengthen work placement and industrial staff development schemes.
Another area of innovation we are actively supporting is technical textiles. We are in dialogue with a number of companies with a view to supporting collaborative projects which will increase technical innovation in the sector. For instance, we are already supporting a company in Lancashire which is researching new methods of bonding non-woven
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materials. In that context it is interesting that the textile industry walked away with two of only 14 Foresight Link awards earlier this year. That is a tremendous achievement and shows that the industry is capable of moving forward aggressively on the innovation front.
The question of sterling was raised. We all appreciate how painful that situation is for the industry. Equally, as the Government have made clear a number of times, we do not feel that action which will effectively abandon macro-economic stability is the right way to deal with the issue.
In relation to retailer purchasing policies, I agree with the noble Lord, Lord Feldman, that it is wrong to point the finger at a company like M&S, which showed enormous loyalty over many years to the British industry. It is now under extreme competitive pressures and is having to review its strategies. I should be delighted if UK retailers increased the proportion of British-made goods they sell. But in the end that has to be their own commercial judgment. It is wrong to ask them to take those decisions on non-commercial grounds when they are under pressure from their own shareholders. We must work with the manufacturing industry to make that decision the most attractive commercial decision for them to take.
There have been a number of calls for the introduction of compulsory country-of-origin labelling. That is an issue which has been frequently considered. The simple answer is that our EU obligations do not allow us to compel manufacturers or retailers to label their products with the country of origin. There is absolutely nothing to stop manufacturers and retailers voluntarily labelling their products. I mention here that as part of its policy Marks & Spencer has done that for many years. It reports that it is not a great deal of help to the situation unless it is linked with very clear examples where that labelling may lead to an association with value for money.
We shall not be introducing legal requirements, but we are interested in working with the industry to find examples of generic brands that can be more effectively promoted. Examples that spring to mind are Harris tweed, Scottish cashmere, Nottingham lace and Yorkshire wool fabrics. That is a constructive way forward, linking origins with other considerations which consumers value and are prepared to pay for.
Perhaps I may also say to the noble Lord, Lord Feldman, that we are working closely with the British Fashion Council on the implementation of the designer fashion action plan which is again about linking high fashion to the manufacturing industry.
There have been calls from many quarters for the Government to increase their support for the textile and clothing industry. There are many schemes through which we help the industry. There are also many general schemes in which the industry can apply to take part, which can also be used for that purpose.
In conclusion the United Kingdom textile and clothing industry is currently facing a very difficult time. There is no doubt that concerted action needs to

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be taken by a number of parties, including government, to address the issues it faces. It is greatly to the credit of the industry that it is doing just that. The national strategy for textiles and clothing can provide an excellent focal point around which a number of bodies can co-ordinate their actions. I very much hope that the process of collaboration which the textile and clothing strategy group has initiated, can be continued, expanded and deepened.
As I have said already, I and my colleagues look forward to receiving the group's final recommendations. We shall respond extremely positively. Perhaps I may say once again how delighted I am that the noble Lord, Lord Feldman, drew our attention to this important area of the British economy. Working together we can do much to ensure that this industry has a prosperous future in a modern and forward-looking economy.
Baroness Amos: My Lords, I beg to move that the House do now adjourn during pleasure until 8.42 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The sitting was suspended from 8.32 to 8.42 p.m.]

Financial Services and Markets Bill
Further consideration of amendments on Report resumed.
Clause 155 [Interpretation]:
[Amendment No. 157A not moved.]
Lord McIntosh of Haringeymoved Amendment No. 158:
Page 75, line 30, after ("have") insert (", or are intended or likely to have,").
The noble Lord said: My Lords., in moving this amendment, I should like to speak also to Amendments Nos. 158A, 158B, 158BA, 158BB, 170CH, 170CJ, 17OCK and 217. These amendments make a number of minor improvements to the competition provisions of the Bill in the light of commitments made to noble Lords opposite and are designed to ensure that the Bill works properly.
Amendments Nos. 158A, 158B, 170CH and 170CJ give effect to a commitment that I gave in Committee to noble Lords opposite. They will ensure that the same limitation as applies to the documents that the director can require people to produce—namely, that they relate to a matter relevant to his investigation—also applies in the case of information.
Amendment No. 217 to Clause 407 makes a change to the definition of the word "Commission" as used in various provisions of the Bill. At present, this says that "Commission" means the "European Commission". This is relevant, for example, in Clause 195(7). However, "Commission" is also used as shorthand in Chapter III of Part X to refer to the Competition Commission. This amendment will ensure that the right meaning is attached to the term "Commission" where it occurs in the Bill. I am sure that the House will agree that that is quite an important clarification.
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Finally, Amendments Nos. 158BA, 158BB and 170CK will ensure that the wording in Parts X and XVIII are consistent. I commend the amendments to the House and beg to move.
Lord Saatchi: My Lords, as the Minister quite correctly said, Amendment No. 158 is a drafting amendment relating to competition scrutiny provisions and is absolutely fine with us. Indeed, we are grateful to him for it. Amendments Nos. 158A to 158BB relate to the power of the Director-General of Fair Trading to request information for the purposes of his review of the FSA's regulations and practices, and the sanctions that he can ask the court to impose for failure to comply with the information requirement. These are drafting amendments only and we are most grateful for them.
On Question, amendment agreed to.
Clause 157 [Power of the Director to request information]:
Lord McIntosh of Haringeymoved Amendments Nos. 158A to 158BB:
Page 76, line 42, leave out from ("control") to end of line 43.
Page 77, line 6, at end insert—
("( ) A requirement may be imposed under subsection (2) or (3)(a) only in respect of documents or information which relate to any matter relevant to the investigation.").
Page 77, line 13, leave out ("punish") and insert ("deal with").
Page 77, line 14, leave out ("had been guilty of contempt of court") and insert ("were in contempt").
On Question, amendments agreed to.
8.45 p.m.
Clause 161 [Authority's power to require information]:
Lord Kingslandmoved Amendment No. 158BC:
Page 80, line 14, leave out ("without delay") and insert ("before the end of such reasonable period as may be specified").
The noble Lord said: My Lords, this amendment is a repeat of one put forward in Committee. It has been repeated only to prompt an explanation from the Government. Under Clauses 161(2)(a), the authority can require an authorised person to provide information and documents,
"before the end of such reasonable period as may be specified"
However, when the authority authorises one of its officers to require an authorised person to provide information or documents under Clause 161(3), the officer can require that such information or documents be provided "without delay". Why is it that the authority must stipulate a "reasonable period" for providing information and documents, while one or its officers can require that they should be provided "without delay"? The amendment would merely align the two provisions so that they would be consistent.
The Government have tabled Amendments Nos. 158BD to 158BK in relation to Clause 164 and they also feature in this grouping. This series of amendments appears to reorganise Clause 164. The reorganisation will leave Clause 164(1) cove ring only

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paragraphs (b) and (c). It applies, if the circumstances arise, in the view of not only the authority but also the DTI—referred to collectively as the "investigating authorities".
Subsection (2) will be expanded to apply to both investigating authorities and not just "the Authority". Therefore, subsection (4)—the equivalent, in the case of the DTI, to subsection (2)—will be deleted. Instead, there is a replacement to subsection (4) which picks up for the authority the deleted paragraphs in subsection (1) and adds to them circumstances suggesting that there may be a contravention of other enactments where the FSA can prosecute but which are outside the new subsection (2). The only situation to which I can think that this might apply is money laundering.
Subsection (5) is deleted as part of the reorganisation. It defines "related offence", which was the previous paragraph (d) in subsection (1) but which has now been deleted and replaced by paragraph (b) in the new subsection (4). Despite the scale of this reorganisation, it seems to us to be acceptable.
Amendments Nos. 158BL to 158BM are to Clause 165. These amendments are consequential and perfectly acceptable. However, perhaps the Government could tell your Lordships whether in Clause 165(2) there should also be a reference to an investigator appointed under Clause 164(5). My reason for asking that is that subsection (2) refers to Clause 164(3) only "so far as relating to" subsection (1), now amended to "as a result or' subsection (1), and the new subsection (5) covers most of what was covered by subsection (1).
Amendments Nos. 158BM to 158NS to Clause 166 are consequential and therefore acceptable. Amendment No. 158BT to Clause 168 is consequential, but did the Government mean to delete subsection (5)?—because, if not, the amendment should require the deletion only down to the end of line 19. The other amendments, the Government will be relieved to know, in our interpretation are consequential. I beg to move.
The Deputy Speaker (Baroness Hooper): My Lords, I should draw to your Lordships' attention that Amendment No. 158BT contains a printing error. The amendment should state,
"to end of line 19",
rather than,
"to end of line 20".
Lord Bach: My Lords, we are grateful to the noble Lord, Lord Kingsland, for describing the government amendments in the group. I have a little more to say about them, but not much. There is one opposition amendment in the group compared with 20 government amendments.
Lord Kingsland: My Lords, I am most grateful to the noble Lord for giving way. I had no wish to describe the government amendments but I was compelled to
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do so by the way the grouping is arranged. We had tabled one amendment which, unfortunately, turned out to be the first in the group. Therefore it fell to me to deal with the rest.
Lord Bach: My Lords, I hope that the noble Lord does not misunderstand me. We are extremely grateful to him for doing that, perhaps more than he realises. As regards his amendment—
Lord Kingsland: My Lords, I am always pleased to throw light on the Government's amendments.
Lord Bach: My Lords, I do not think that I said that.
As I said in Committee in dealing with the opposition amendment, it is clearly important that the authority can get access to information and documents on a timely basis. This is vital for effective regulation. It is for this reason that subsection (3) of Clause 161 provides that the authority can require the information or documents "without delay".
As I attempted to explain when we considered this same amendment before, we do not agree that there should be a requirement for all requests for information to be subject to some specified period for compliance. That would be bureaucratic and quite unnecessary. The authority must, of course, be reasonable in its expectations of when information may be forthcoming. As was explained on the previous occasion, the term "without delay" means without unjustified or unreasonable delay. It does not mean instantly. That would be an absurd interpretation of the phrase.
Therefore it is clear that subsection (3) does not require a person to meet some unreasonable or impractical requirement. Imposing a requirement on the FSA to specify some reasonable period within which the requirement for information must be complied with would simply add an unnecessary bureaucratic burden. It would place a quite unnecessary onus on the FSA to decide in each case what period must reasonably be allowed for producing the information. The current wording enables the provider of the information to take such time as is necessary for providing the information so long as he does not delay in the normal sense of that word.
The noble Lord drew attention to a difference in wording between various parts of the clause. Clause 161(2) deals with the FSA sending out an information request. Subsection (3) deals with the situation where it has been deemed necessary to authorise a specific officer to obtain the documents or information. The term "without delay" reflects the more immediate purpose or nature of such a requirement, but it still means without unreasonable delay. That is why we believe that the wording in subsection (2) is appropriate in the first situation and the wording in subsection (3) is appropriate for a situation where it has been deemed necessary to authorise a specific officer to obtain documents or information.

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The government amendments all constitute improvements to the drafting. They reflect the continuing commitment of the Government to make this legislation, which is bound to be technical and complicated, as user-friendly as possible. In the course of looking at ways in which we need to align the investigation powers under Part XVII with the comparable provisions under Part XI, we have also dealt with some potential ambiguity in the drafting of Part XI.
These amendments simplify the drafting of Clause 164, which gives the authority the powers it needs to investigate possible offences and other contraventions under the Bill. They deal in a more elegant way with the fact that some types of investigation—for instance, into possible insider dealing—are powers held concurrently by both the authority and the Secretary of State for Trade and Industry.
I hope that noble Lords have seen a version of the clause as it would look if the House amends it tonight, to assist your Lordships with the changes that are made.
Building on the restructured Clause 164, the other government amendments improve the clarity of the cross references in other clauses in Part XI to the different types of investigation that may be mounted under Clause 164, and correct technical defects in the existing wording of Clauses 165(2), 168(4) and 169(5). It was not clear that these references worked correctly in identifying the cases to which those subsections apply.
These are essentially technical drafting amendments and do not represent any change in the effect of the provisions in Part XI, although the restructuring of Clause 164 has led to a relatively large number of purely consequential amendments, including additional amendments to Clause 280.
Amendment No. 158BF is part of the rearrangement of Clause 164, in that it removes subsection (1)(d), which is replaced by subsection (4)(b) in Amendment No. 158BK. But this amendment makes a subtle change to the effect of the clause, in that it deletes subsection (1)(e), which is not replaced by the other amendments. This removes an unnecessary and potentially unhelpful reference to offences that may have been committed by virtue of Clause 395. Clause 395 is concerned with circumstances in which an individual may be deemed guilty of an offence committed by a corporate body or partnership. Where it applies, its effect is that the individual is guilty of the offence under the provision which originally creates the offence. Therefore it is unnecessary to have to refer expressly to Clause 395 in Clause 164. To do so might cast doubt on the way in which Clause 395 was intended to operate. Subsection 1(e) is therefore removed.
Finally, Amendment No. 158BL brings Clause 165 into line with Clauses 163 and 164 by making it clear that one or more persons may be appointed to conduct an investigation, and that they must be competent persons.
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The noble Lord, Lord Kingsland, asked whether Clause 165(2) should refer to Clause 164(5). That is not necessary, as the powers under Clause 164(3)and (5) will be the same. I hope that that answer satisfies t he noble Lord.
9 p.m.
Lord Kingsland: My Lords, that final answer to one of my questions sums up much of the proceedings of this Bill—"it all depends by what you mean by…", and so on.
So far as concerns my Amendment No. 158BC, I am most grateful to the Minister for his explanation. I think he is saying that what I wanted to achieve from my amendment is already on the face of the Bill, and therefore I have nothing to worry about. If that is so, I happily beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Clause 164 [Appointment of persons to carry out investigations in particular cases]:
Lord Bachmoved Amendment No. 158BD:
Page 82, line 14, leave out ("the Authority") and insert ("an investigating authority").
The noble Lord said: My Lords, I beg to move.
Lord Elton: My Lords, the odd grouping of my noble friend's amendment at the beginning of this group means that when the Minister spoke to his amendments for the first time it blocked out any comments on them because, of course, no one can speak to an amendment at Report stage after the Minister. Therefore, I am speaking on the first amendment in his group.
I wish merely to express my thanks for the circulation of the interpretation of the effect of this vast shoal of amendments, which would have been beyond me had he not sent it. Even so, the task of keeping up with the flow of government amendments—even with this facilitating assistance—is something which would normally be a full-time job for people who had the time in which to do it. I repeat the complaints made earlier by my noble friends—we have perhaps rather lost sight of the resentment that we felt in the early stages—that it is very difficult indeed for a House which is not supposed to consist of full-time professionals to keep up with the volume of technical changes that the Government are making; to highly technical legislation. But I am grateful to the Minister for having done his best to help us with the nearest thing to a Keeling schedule that he can provide. That is the point I wished to make.
Lord Bach: My Lords, I am very grateful to the noble Lord. Although it is painful to have to go through technical amendments such as these, it may be that in years to come others will thank us for having taken the trouble to do so, even shortly.
On Question, amendment agreed to.
Lord Bachmoved Amendments Nos. 158BE to 158BK:
Page 82, line 16, leave out paragraph (a).
Page 82, line 21, leave out paragraphs (d) and (e).
Page 82, line 24, leave out paragraphs (f) to (1).
Page 82, line 39, leave out ("the Authority") and insert ("an investigating authority").
Page 83, line 2, leave out ("Authority") and insert ("investigating authority").
Page 83, line 4, leave out subsections (4) and (5) and insert—
("(4) Subsection (5) applies if it appears to the Authority that there are circumstances suggesting that—

(a) a person may have contravened section 18;

(b) a person may be guilty of an offence under any enactment other than this Act—

(i) which the Authority has power to prosecute under this Act; but

(ii) which it would not otherwise have power to investigate;

(c) an authorised person may have contravened a rule made by the Authority;

(d) an individual may not be a fit and proper person to perform functions in relation to a regulated activity carried on by an authorised or exempt person;

(e) an individual may have performed or agreed to perform a function in breach of a prohibition order;

(f) an authorised or exempt person may have failed to comply with section 55(5);

(g) an authorised person may have failed to comply with section 58(1) or (2);

(h) a person in relation to whom the Authority has given its approval under section 58 may not be a fit and proper person to perform the function to which that approval relates; or

(i) a person may be guilty of misconduct for the purposes of section 65.

(5) The Authority may appoint one or more competent persons to conduct an investigation on its behalf.
(6) "Investigating authority" means the Authority or the Secretary of State.").
On Question, amendments agreed to.
Clause 165 [Investigations etc. in support of overseas regulator]:
Lord Bachmoved Amendments Nos. 158BL and 158BM:
Page 83, line 22, leave out ("a person") and insert ("one or more competent persons").
Page 83, line 24, leave out ("(so far as relating to") and insert ("(as a result of").
On Question, amendments agreed to.
Clause 166 [Investigations: general]:
Lord Bachmoved Amendments Nos. 158BN to 158BS:
Page 84, line 25, leave out ("the Authority") and insert ("an investigating authority").
Page 84, line 26, after (" 164(3)") insert ("or (5)").
Page 84, line 28, leave out paragraph (b).
Page 84, line 35, after (" 164(1)") insert ("or (4)").
Page 84, line 39, leave out from ("(2)") to second ("of") in line 40.
On Question, amendments agreed to.
Clause 168 [Additional power of persons appointed as a result of section 164(1)]:
Lord Bachmoved Amendment No. 158BT:
Page 86, line 18, leave out from ("appointed") to end of line 20 and insert ("as a result of subsection (1) or (4) of section 164").
On Question, amendment agreed to.
Clause 169 [Powers of person appointed to investigate as a result of section 164(2)]:
Lord Bachmoved Amendments Nos. 158BU and 158BV:
Page 86, line 35, leave out ("or (4)").
Page 86, line 36, leave out ("(so far as relating to") and insert ("(as a result of").
On Question, amendments agreed to.
Clause 170 [Admissibility of statements made to investigators]:
[Amendments Nos. 158C and 158D not moved.]
Lord McIntosh of Haringeymoved Amendment No. 158DA:
Page 87, line 15, leave out ("(4)") and insert ("(5)").
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 158BC. I beg to move.
On Question, amendment agreed to.
Clause 171 [Information and documents: supplemental provisions]:
Lord McIntosh of Haringeymoved Amendment No. 158DB:
Page 88, line 10, leave out ("(4)") and insert ("(5)").
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 158BC. I beg to move.
On Question, amendment agreed to.
Clause 172 [Entry of premises under warrant]:
Lord McIntosh of Haringeymoved Amendment No. 158DC:
Page 89, line 31, leave out ("(4)") and insert ("(5)").
The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 158BC. I beg to move.
On Question, amendment agreed to.
Clause 174 [Obligation to notify the Authority]:
Lord Kingslandmoved Amendment No. 158E:
Page 90, leave out lines 27 and 28 and insert ("Before a person can acquire").
The noble Lord said: My Lords, I shall speak first to Amendments Nos. 158E, 158EA, 158EB, 158EC, 158H, 158J, 158K, 158L and 158M.
These amendments were tabled by the Opposition in Committee. If I recall correctly, the Minister said in Committee that he was broadly in agreement with the objectives of these amendments and that he would think about the points that had been made. The Government have not tabled any amendments to this clause, and as a reminder of the Minister's remarks, we have tabled our amendments again.

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The Minister will be relieved to hear that I do not want to repeat what I said in Committee, except to say that the corresponding provisions dealing with the obtaining of new or increased control in relation to UK authorised investment firms under the existing Investment Services Regulations 1995 use wording which mirrors our amendments. Regulation 41(1) of those regulations states that:
"No person shall become"—
a relevant controller of a UK authorised investment firm unless —
"he has served on each relevant regulator written notice that he intends to become such a controller".
We have followed this approach with our amendments as we believe that this form of wording is clearer than the present form of words in Clauses 174 and 186. I should remind your Lordships that these are not merely technical points: failure to comply with Clauses 174 and 186 constitutes a criminal offence.
So far as concerns Amendments Nos. 158F and 158G, they relate to the definition of "controller" as used for the purposes of the "control over authorised persons provisions". They refer specifically to the definition of an "associate". Importantly, it is necessary to aggregate with the acquired's own holding of shares or voting rights, the shares or voting rights of his associates, and it is provided in Clause 175(5) that "associate" has the same meaning as in Clause 412.
Clause 412 repeats the definition in the implementing regulations relating to all three single market directives. However, it seems to include as an associate a nominee company and as a result all shares held by the nominee company have to be aggregated, and this could in itself bring the notification procedures into play. Similarly, the definition extends to cover parties to an agreement for the acquisition or disposal of shares and, although acquisition and disposal probably relate to transfer of the legal title, it would be dangerous to assume that this does not include brokerage agreements.
Accordingly, it would be necessary to regard the broker as an associate and all the interests of that broker would have to be aggregated. Even worse than this, if the acquirer is the nominee company or broker, it will be necessary to aggregate with him all the holdings and voting rights of all clients, even if they have nothing to do with the nominee or broker at all. That is going far too far, especially in the case of control over authorised persons provisions, but also even in so far as the control provisions generally are concerned. In addition, I do not see how the person "H" in Clause 412(4) can possibly discover the facts which the definition of "associate" requires him to do in this regard.
The Treasury's Explanatory Notes say that the Treasury will be given the power to provide exemptions from Part XII where, for example, the definition of "associates" has the effect that two or more people would have to notify the same acquisition of shares or voting rights. That is exactly what the wide definition of "associates" always requires, as it catches
1466
two people in relation to the same holding of shares rather than agreements relating to two different holdings, as is surely intended. As I have explained, the scope of "associates" can be far wider than this as it can apply to all client relationships. In my submission, therefore, the Government ought to agree to this amendment or, better, agree it in Clause 412 itself.
I speak now to Amendments Nos. 219A to 219F. As your Lordships will be aware, Clause 412(1) provides that its definition of "controller" applies throughout the Bill. However, there are similar but different provisions relating to who is a controller for the purposes of Part XII—control over authorised persons—and therefore that should be expressly excluded from the terms of Clause 412(1). The definition of "associate" applies both in relation to a company in which each holder holds shares and in relation to another company in which each holder can exercise or control the exercise of voting rights. Applying that in paragraph (g), which is in any event far too wide, leads to a ridiculous situation. It means that, if a holder has a relevant agreement or arrangement with another person in relation to the company in which he holds shares, that other person is also an associate in relation to the company in which he has voting rights, even though the agreement has nothing to do with it. The converse is also true. I can therefore see no justification for this wide definition, which would lead to absurd results.
I would also emphasise that the amendment follows the wording which is in the single market implementing regulations. Those are the regulations under the European Communities Act which implement the four single market directives. It may be that the draftsman of the Bill was being over-precise in separating out the two different holdings into two different companies, but we surely have to insist that the "associate" definition stays as it is in the implementing regulations. Even if it does, it still has the problems which Amendment No. 11 tries to solve, but this peculiar extension only makes the position more inexplicable. There is really no way that any company can possibly police it. Amendments Nos. 219D and 219E delete "D" from paragraph (g) as a consequence of going with a single company test. I beg to move.
Lord McIntosh of Haringey: My Lords, in this large group of opposition amendments there is one lone government amendment, Amendment No. 159, to which I should like to speak before I refer to the opposition amendments.
The Bill introduces the controllers regime to replace the current patchwork of arrangements set out in various pieces of legislation with a single set of coherent prohibitions—provisions; it was a Freudian slip! The regime has attracted much debate during the passage of the Bill both here and in another place. The principal matter for discussion has been the scope of the obligation to notify a change in control. A number of interesting and technical examples have been put

1467
forward where it is felt that these obligations fall too heavily or too indiscriminately in certain circumstances.
The Government are committed to creating a regime which is both effective and fair while also ensuring that we fully and properly implement our obligations under European law. The single market directives constrain our room for manoeuvre in this area to a large degree, but we have been persuaded that there is a case for greater flexibility. With that in mind, we have tabled Amendment No. 159 to Clause 188, which introduces a power for the Treasury to exempt by order certain persons from the obligations to notify the FSA of acquisition or divestment of control. In the case of a provisional agreement to sell shares, for instance, we do not consider it necessary to require both the buyer and the seller to notify the agreement. In that situation, the seller might be exempted from the obligation to notify.
We do not think it is appropriate or sensible to seek to be definitive on the face of the Bill about the circumstances in which it would be reasonable and proportionate to disapply the notification requirements. Our discussions on this part of the Bill have thrown up a number of fairly detailed technical points and it seems likely that other circumstances will arise or will be identified in the future in which it is desirable to relieve persons of the obligation to notify using this power. But I must emphasise that this power can be exercised only in accordance with the single market directive.
In addition, the Delegated Powers and Deregulation Committee judged that the amendment raises no problems in relation to the delegated power provided for here, and I hope that the amendment will be acceptable to the House.
I turn to the Opposition amendments, beginning with those relating to nominees. The point raised by Amendments Nos. 158F—and by 158G, which seems to be a straight duplicate of Amendment No. 158F; I hope I understand it correctly—and Amendment No. 219F—
Lord Elton: My Lords, it is clear to me and it surely cannot have escaped my noble friend's notice that the last line of Amendment No. 158F contains the words,
"at the direction of Y",
and in the last line of Amendment No. 158G the words are,
"at the discretion of Y".
Presumably, therein lies the difference.
Lord McIntosh of Haringey: My Lords, I had not noticed that either. I wonder whether, with the leave of the House, the noble Lord, Lord Kingsland, would like to explain the difference between the two.
Lord Kingsland: My Lords, because I realised that there could be a difference, I referred to the amendments, rightly, as "they" and not "it"!
Lord McIntosh of Haringey: My Lords, I have already used my Browning example. Noble Lords will recall that Browning was asked late in life what his early poem, "Sordello" meant. He said,
"When it was written, God and Robert Browning knew what it meant; now only Gods knows".
Lord Kingsland: My Lords, that applies to a number of places in this building!
Lord McIntosh of Haringey: My Lords, I am delighted to have discovered the difference between the two amendments, for which I am grateful to the noble Lord, Lord Elton.
Amendment 219F, which is not the same, also concerns circumstances where there may be a degree of unnecessary double counting of shares and voting rights. The amendments seek to exempt a nominee or agent who only acts on the instructions of another person.
Unfortunately, as I explained in Committee, we cannot agree to this amendment as the terms in which it is drafted would breach the European directives; namely, Article 11 of the second banking directive and Article 9 of the investment services directive, which require notification of the holding of either capital or voting rights. I shall gladly look further at examples of possible duplication in the notification requirements to see whether we should exercise the new power to exempt particular circumstances. But that cannot be at the expense of giving full effect to the requirements of the directives.
Amendments Nos. 158E to 158EB and Amendments Nos. 158H to 158L refer to "taking steps". We are in complete agreement with the noble Lord, Lord Kingsland, that it should be only the step which results in the acquisition of control that should need to be notified. Equally, it is important that it is clear that this step should not proceed without approval.
We amended Clause 174 in another place precisely to make this clear. However, in view of the concerns expressed by the noble Lord, Lord Kingsland, in Committee, we have again consulted parliamentary counsel. We are satisfied that it is implicit that the steps referred to in Clause 174 are the steps which, if taken, would directly lead to the person concerned acquiring control and not some prior steps, and that the courts will not take the view that some first tentative step on the path to acquiring control should be notified. To be more precise, we are clear that merely instructing your broker to ask the price at which your target shares are currently trading would not trigger the obligation to notify.
We have considered whether there is anything further that might be done to make that conclusion any more secure. We do not see that there is. We certainly do not think that the amendments achieve that. We therefore take the view that the text of the Bill is correct as it stands.
I turn now to Amendment No. 219A, which appears to seek to separate the definition of "controller" under Clause 412 as it applies for the purposes of other parts

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of the Bill—for example, Part XI on investigations—from the circumstances in which acquisition of control requires notification under Part XII.
I do not think that such a separation is helpful. The concepts to be applied are the same. Having a separate definition of "controller" in Clause 412 can be seen as rather duplicative, but we think it is necessary to have a single Bill-wide definition of the term.
In practice, we shall want to keep the definition under Clause 412 in step with the notification requirements tinder Clause 175, which is why we have included a power to amend Clause 412 with the power to amend the notification requirements. I am happy to make clear for the record our intention to keep these provisions in line if that provides any reassurance.
Finally, Amendments Nos. 21913 to 219E and Amendments Nos. 158EC, 158M and 158N appear to be drafting amendments. We do not see that they add any value and we are not, therefore, inclined to accept them. I hope that the House will approve our Amendment No. 159 and that noble Lords will not feel it necessary to press the other amendments.
Lord Kingsland: My Lords, I thank the Minister for his response and derive some comfort from it in relation to our amendments. I shall look carefully at the text of Hansard to see whether I must pursue the matter at Third Reading.
The noble Lord asked whether the Opposition was prepared to support Amendment No, 159. I hope that the Minister will allow me one further request for clarification. Following on his observations, my understanding is that the amendment allows the Treasury to provide for exemptions from the notification requirements. To that extent it is, therefore, applauded. The Treasury's Explanatory Notes make clear that the power of exemption is intended to protect persons from an unnecessary obligation to notify the authority. It is explained that exemptions will be granted only in cases where the single market directives do not apply or where, for example, the definition of "associates" has the effect that two or more people must notify the same acquisition of shares or voting rights.
However, we believe that what would do most to prevent unnecessary obligations to notify would be a change in the phraseology of the notice requirement in Clause 174. It is very difficult to be able to identify the precise step that will result in somebody acquiring control under Clause 174(1). Accordingly, any act which is likely to lead to a person acquiring control may in practice cause that person to notify. The Minister has been quite helpful on that point, but it shows the importance of accepting at least the spirit of our amendment to the clause. I hope that what the Minister said does that. If so, I do not believe that we shall need to return to the matter at Third Reading.
Lord McIntosh of Haringey: My Lords, with the leave of the House, we have dealt with it in an amendment to Clause 188 because of the difficulties under Clause 174 of conformity with the European
1470
directives. The amendments to Clause 174 which the Opposition have tabled, and any others that we have tried to think of, simply do not work. We believe, however, that the amendment to Clause 188 provides the necessary flexibility and makes it possible for the Treasury to exempt persons under certain circumstances from the notification requirements. We share the view of the noble Lord that we should, as far as possible, reduce the burden of notification, and we believe that our Amendment No. 159 is the best way to achieve that.
Lord Kingsland: My Lords, I am most grateful to the noble Lord for again responding so fully. In the spirit of his constructive response, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 158EA to 158EC not moved.]
Clause 175 [Acquiring control]:
[Amendments Nos. 158F and 158G not moved.]
Clause 186 [Notification]:
[Amendments Nos. 158H to 158M not moved.]
Clause 187 [Offences under this Part]:
[Amendment No. 158N not moved.]
Clause 188 [Power to change definitions of control etc.]:
Lord McIntosh of Haringeymoved Amendment No. 159:
Page 98, line 30, at end insert—
("( ) provide for exemptions from the obligations to notify imposed by sections 174 and 186;").
On Question, amendment agreed to.
Clause 196 [Rescission and variation requirements]:
Lord Bachmoved Amendment No. 160:
Page 103, line 28, after ("power") insert ("of the Authority on its own initiative").
The noble Lord said: My Lords, on behalf of my noble friend I rise to move Amendment No. 160 and speak to Amendment No. 161. These amendments represent minor drafting changes and remove a degree of overlap between subsections (2) and (3) of Clause 196. At present both subsections deal with the decision of the authority to vary a requirement ors its own initiative, but subsection (2) deals also with the decision to rescind. The amendment limits subsection (2) to the situation in which the FSA decides to rescind a requirement on its own initiative. In this case a written notice must be issued specifying the date on which the requirement ceases to have effect. Subsection (3) continues to deal with the variation of a requirement of the FSA's initiative, with the lull supervisory procedure under Clause 193 being applied. This is the same procedure as applies to the original decision to impose the requirement. I beg to move.
On Question, amendment agreed to.
Lord Bachmoved Amendment No. 161:
Page 103, line 28, leave out ("or vary").

1471
The noble Lord said: My Lords, I beg to move this amendment formally.
On Question, amendment agreed to.
Clause 206: [Statements of policy]:
Lord Kingslandmoved Amendment No. 161TA:
Page 106, line 32, at end insert ("and
(c) the circumstances in which the Authority will take disciplinary measures under this Part.").
The noble Lord said: My Lords, under Clause 206(1) the authority must prepare and issue a statement of policy with respect to (a) the imposition of penalties under Part XIV and (b) the amount of penalties under Part XIV as well. Part XIV is that section of the Bill dealing with the power of the authority to take disciplinary measures against an authorised person who has contravened a requirement imposed on him by or under the Act.
The authority's statement of policy on the imposition of penalties and the amount of penalties themselves is important. We believe the statement should be extended to cover the authority's policy on the circumstances in which it will take disciplinary proceedings. No doubt the authority will have a policy on taking disciplinary proceedings and, in the interests of transparency, we believe that policy should be made public and be made subject to consultation under Clause 207.
Clause 206(2) sets out those matters to which the authority must have regard in the context of its policy on the scale of penalties. Amendment No. 161UA reflects our proposal that the authority's statement of policy should be extended to cover its policy on the circumstances in which it will take disciplinary proceedings. Amendment No. 161VA would add a further matter to which the authority must have regard: namely, whether the person who contravened a requirement brought the matter to the authority's attention.
We believe that this is an important consideration for the authority to have regard to when fixing penalties. On the assumption that those who do bring contraventions to the authority's attention will be eligible for lower penalties, this provision will encourage authorised persons to come forward, rather than hoping that the matter will remain undiscovered.
I now turn to Amendment No. 161WA. Financial institutions in general, and the City in particular, are very concerned, as your Lordships must by now be aware, about the authority's disciplinary powers. I hasten to add that this is not because they are frightened of being disciplined for genuine wrongdoing, but rather because of the almost unlimited circumstances in which they are at risk of being so disciplined.
The reason that firms are so concerned about discipline is the following: first, FSA rules cover virtually every aspect of an authorised person's regulated activities; secondly, the rules are generally drafted in absolute terms which apply to every single transaction. For example, a broker will normally be
1472
required to achieve timely execution on every trade, and a financial adviser to give suitable advice on every occasion. Accordingly, a single failure amounts to a rule breach.
Thirdly, there is no de minimus provision, which provides that a small number of failures will not amount to a rule breach. Fourthly, firms are required to keep records of their activities and generally to log rule breaches. Finally, firms are required to notify serious rule breaches to the authority, which in any case carries out routine inspections of firms.
Virtually every authorised firm will therefore be in breach of one or more rules for much of the time and will feel exposed to the risk of disciplinary action. For this reason, understandably enough, firms are concerned to ensure that there should be adequate safeguards built into the disciplinary process.
This amendment seeks to address one particular concern, which is that once the authority has decided to commence disciplinary action, by the issue of a warning notice, there should be ample opportunity for firms, and also approved persons and individuals being disciplined for market abuse, to be able to speak to an independent committee within the authority in order to attempt to settle the matter in advance of a formal tribunal hearing. At present the Bill contains very little about the procedure which is to apply between the issue of the warning notice, dealt with by Clause 203, and the issue of the decision notice, dealt with by Clause 204.
There is provision in Clause 390 that the authority must have a procedure in relation to the giving of warning and decision notices. Subsection (2) states that the procedure must ensure that the decision to give such notice should be taken by someone who is not directly involved in establishing the evidence upon which the decision was based. However, in our submission, this does not go far enough. The proposed new clause after Clause 207 seeks to codify what the authority has recommended in its response to Consultation Paper 17.
Consultation Paper 17, issued in December 1998, sets out the authority's proposals for enforcing the new regime. It attracted, as many noble Lords will doubtless be aware, a significant amount of comment, in particular in relation to ensuring that firms were able to make effective representations to the FSA without needing to go to the trouble and expense of a formal disciplinary hearing.
The authority published its response in July 1999 taking into account various responses received from the financial services industry. Pages 4 to 7 set out the authority's comments on the decision-making process. Paragraph 18 states that the authority is attracted to a disciplinary decision-making process with most of the features now contained in the proposed new clause after Clause 207.
The reason for setting the process out in the Bill rather than hoping that the authority will adopt this procedure and continue to keep it in force is to give confidence and certainty to regulated firms. Without in any way seeking to diminish the importance of

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observing the rules in the first place, and without denying that in many circumstances disciplinary action is wholly justified, firms are anxious to ensure that, if threatened with such proceedings, they have the assurance of a reasonable opportunity to seek to persuade the authority that it should not so proceed. It could, for example, be because the authority is mistaken as to the facts, has overlooked mitigating circumstances or perhaps is even treating the firm unfairly or inconsistently. I beg to move.
9.30 p.m.
Lord Bach: My Lords, Amendment No. 161VA would add a new factor to which the authority must have regard in its policy on setting penalties: whether the alleged contravenor brought the matter to the FSA's attention.
Everyone would agree that any reasonable public authority is bound to take due account of whether a person drew the authority's attention to a contravention. In another field it would be called good mitigation. The act of "owning up" is clearly a factor that should be taken into account. That is part of establishing an effective collaborative relationship between regulator and regulated.
Indeed, the authority has already made clear that this would be one of the factors that it would take into account in its policy on imposing fines on authorised persons under Part XIV and approved persons under Part V. As has been pointed out, this was factor (g) in a list of factors to be taken into account on page 36 of the authority's Consultation Paper 17, entitled Enforcing the New regime, published in December 1998.
Other factors listed on page 36 of that paper include the degree of co-operation shown in the investigation of a breach, or steps taken to prevent similar problems arising in future, neither of which appears on the face of the Bill.
Similarly, the authority dealt with the factors to be taken into account when deciding to impose financial penalties for market abuse on page 53 of CP17. These include the degree of co-operation with FSA inquiries and steps taken to address the misconduct in question. It is in any case right that we should not include factors here that are not included in the exactly equivalent provisions in relation to the financial penalty powers in, first, Part V, approved persons in Clause 69, secondly, Part VI, official listing in Clause 91, and, thirdly, Part VIII, market abuse in Clause 120.
The point is that we have identified in Clause 206 particular factors which the joint committee said should be given particular weight, but these are not exhaustive. There are clearly other factors that any reasonable public authority should take into account, one of which is whether or not the person owned up.
The FSA is well aware of that and has reflected it in its proposed policy. Indeed, it has reflected it on a wider basis than would be implied by the amendment in isolation. The policy will be carried through to its enforcement manual, which it will publish soon for further consultation.
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Amendments Nos. 161TA and 161UA seek to expand the scope of the statement of policy to be issued under Clause 206 to include a statement as to the circumstances in which the FSA will take disciplinary measures under Part XIV as opposed to the policy on imposing financial penalties. We submit that that, too, is unnecessary.
Page 35 of CP17 listed criteria which the FSA proposed to take into account in determining whether to take disciplinary action. As with the factors in fining decisions already referred to, these criteria for disciplinary actions received broad support during the process of consultation on CP17. Again, the FSA's draft enforcement manual will specifically cover these criteria, so there will be a further opportunity for consultation on them.
Our point is that we have followed the recommendation of the joint committee in prescribing what must be covered by the statement of policy. That does not mean that the authority should not publish and consult on other aspects of its policy—as indeed it has been doing—but we have not attempted to make this provision exhaustive and we do not think it necessary to do so. It is on that basis that we hope the noble Lord will agree to withdraw his amendment.
The proposed new clause after Clause 20'7 seeks to legislate for the enforcement committee, the arrangements for which were also set out in CP17. As we have made clear on a number of occasions, including in the Government's response to the Burns committee and in another place, we do not think it appropriate or desirable to set out the administrative arrangements which the FSA must follow in such detail. Instead, we have used the Bill to impose certain important parameters.
Clauses 390 and 391 require the authority to consult on and publish a statement of its procedures. In keeping with the recommendation of the Burns committee that,
"the FSA should set up an enforcement committee or some equivalent mechanism to separate the functions of investigation and enforcement",
the Government introduced subsection (2) of Clause 390. It requires that, among other things, the published procedures must be designed to secure an appropriate separation between those directly involved in building a disciplinary case and those taking the decision to proceed with the disciplinary action.
Thus the enforcement committee is the means by which the FSA currently proposes to meet that requirement, but the Bill does not prevent these administrative arrangements being developed and improved in future. Deliberately, Clauses 390 and 391 leave the way open to future development of the procedure. That is entirely in keeping with the Burns committee recommendation.
The FSA will allow time for representations to be made following the warning notice. That is already a requirement under Clause 382. The FSA has also announced that representations can be both written and oral. However, we cannot accept that there should be a requirement in the Bill that the enforcement

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committee should take oral representations from the authorised person, his legal representatives or the authority. In our opinion, that would be going too far in turning the committee into an additional tribunal.
The Government have made clear again and again that we do not believe it is desirable that the authority's internal arrangements should be turned into a rival tribunal to the independent financial services and markets tribunal established under Part IX of the Bill. That tribunal is a fully independent, first-instance tribunal and, as such, is the guarantor of a person's right to a fair hearing. Inserting a prior quasi-tribunal stage would serve only to increase the time and expense involved before the person concerned has access to the proper tribunal.
We believe that the amendment suffers from other problems; for example, the notification required under subsection (10)(a) would duplicate the notice of discontinuance which the authority is required to issue under Clause 384 where it decides not to proceed with an action proposed in a warning notice.
It is also important that we do not fudge the matter of who is taking the action in question. The amendment appears to give that responsibility to the committee, as distinct from the Financial Services Authority, although the powers are the authority's and it must be the authority that is accountable for their use.
By appearing to give the committee separate responsibility for the exercise of the authority's powers, there is a danger that the committee will separately become a competent authority for the purposes of the European directives. We have already amended Part IX of the Bill to avoid precisely that possible, and we believe unwelcome, outcome for the tribunal. It is for those reasons that we invite the noble Lord to withdraw his amendments tonight.
Lord Kingsland: My Lords, I thank the Minister for his characteristically full reply. I am, of course, disappointed that he should consider that the first three amendments to which I spoke should demand a degree of precision on the face of the Bill which he is reluctant to concede. This is not the first time that the Opposition have been presented with that view and it will probably not be the last. I have come to accept that the Government are keen to maximise the discretion that the authority should have in these circumstances. Although the Opposition disagree with that approach, it appears that that is what the City will end up with.
So far as concerns the amendment to additional Clause 207A, I should like to look in full at the answer that the noble Lord gave before I tell him whether or not this is a matter that the Opposition intend to pursue at Third Reading. For what it is worth, my own view is this: I believe that the Government are running a very high-risk policy with Article 6.1 of the European Convention on Human Rights. Should the Government's interpretation prove wrong, it is almost certain that the Bill will have to be amended.
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Clause 207A provides an extremely useful cushion to the FSA to deal with situations which, if dealt with formally, might expose the inadequacy of the protection of the individual in the Act. Therefore, I ask the Minister to reflect on what he said about our proposal. Perhaps he will surprise me and come back at Third Reading with an amendment that reflects our own. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 161UA and 161VA not moved.]
[Amendment No. 161WA not moved.]
Clause 211 [Rights of the scheme in relevant person's insolvency]:
9.45 p.m.
Lord Hunt of Wirralmoved Amendment No. 161XA:
Page 110, line 21, at end insert ("; and
( ) for transferring to the scheme manager a right of recovery against that person").
The noble Lord said: My Lords, in moving this amendment, I should like to raise an important point about the financial services compensation scheme. In essence, as your Lordships will know, it is proposed to have the power to extinguish policyholders' rights to recovery and replace those rights with a claim under the compensation scheme. So the compensation scheme will have a new right to proceed as a creditor of the failed firm.
As many noble Lords will know, reinsurance contracts usually restrict liability to payments actually made by the insurer and I am concerned that the Bill's provisions will sever that link. The reinsurer would not have a contractual liability to the compensation scheme and its new right of recovery. Therefore, this amendment seeks to extend Clause 211 to allow rules to be made which transfer the liability of the insurance company in respect of the claimant to the scheme. That will be in addition to the power to extinguish the liability and confer new rights on the scheme.
However, the amendment seems to solve the problem. I should be very happy if the Government were to accept it and thus to ensure that the reinsurer would have a contractual liability under the compensation scheme. I beg to move.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord, Lord Hunt, for moving his amendment, for writing to me in advance and, indeed, for the positive and constructive contribution which he has been making to the Bill on a number of occasions.
I have problems with the drafting of the amendment but I shall not weary the House with those problems unless the noble Lord, Lord Hunt, wants me to. Perhaps we can have a few words in private about that.

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However, I have a question as to whether the issue which he has raised needs to be addressed. On balance, we do not believe that it does. We reached that conclusion by looking at Clauses 211 and 213 together. Clause 211 deals with the rights of the compensation scheme manager in the event that compensation is paid out to the customers of a firm which is unable or likely to be unable to meet its liabilities. For most firms, that does not raise any issues in connection with reinsurance contracts because they are not relevant to most types of business.
The issue here is effectively confined to cases of insurance company insolvency, as the noble Lord recognised. In practice, however, we believe that it will almost certainly be necessary and desirable for the scheme manager to take measures under Clause 213 where an insurance company is in financial difficulties.
Under Clause 213, the FSA will be able to make provision for the scheme manager to take measures to avoid the inconvenience and expense of allowing insurance companies to become insolvent by effecting the transfer of policies to another insurer or by providing assistance to the relevant insurer to enable it to remain in business, so allowing for a more orderly and less expensive run-off of the liabilities on its policies. Indeed, that is what the Policyholders Protection Board does at the moment.
Those measures are important. The administrative costs of liquidation for insurance companies can be extremely high because the run-off of insurance liabilities can last for several years. Not only does liquidation push up costs, it can also mean inconvenience for customers, who may face substantial delays as the liquidator seeks to calculate the insurer's overall liabilities and so determine what can be paid to individual claimants.
Where assistance under the compensation scheme is given to the insurance company under Clause 213, that will enable the insurance company to pay its policyholders itself. There will be no need to rely on the provisions in Clause 211 and therefore there is no doubt that the insurer can claim against it reinsurers.
So it is difficult to envisage the circumstances which would, in practice, give rise to the problem which is raised by this amendment. I hope that that reassures the noble Lord and, indeed, the Association of British Insurers and that he will not feel it necessary to press the amendment.
Lord Hunt of Wirral: My Lords, I thank the Minister for that response. The amendment arises from the concern about the effect on reinsurance contracts and he has given some reassuring words which I should like to consider and I know that the Association of British Insurers would also wish to read what he said. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 224 [Determination under the compulsory jurisdiction]:
Lord Saatchimoved Amendment No. 161YA:
Page 118, line 18, leave out subsections (4) to (7) and insert—
("(4) The ombudsman's determination shall be binding on the respondent and the complainant and shall be final.
(5) The ombudsman's statement must—

(a) give the ombudsman's reasons for his determination; and

(b) be signed by him.").

The noble Lord said: My Lords, there are four amendments in this group. They all make distinct and different points so, perhaps tediously for your Lordships, I am obliged to describe them in turn. They all deal with what we perceive to be anomalies in the crucial ombudsman scheme. I must also confess that Amendment No. 161ZA has been tabled incorrectly. It should relate to line 13 on page 118 and not to line 37.
Clause 224(2) states that,
"A complaint is to be determined by reference to what is, in the opinion of the ombudsman, fair and reasonable in all the circumstances of the case".
That sounds fine. However, our concern with that formulation is that it would enable the ombudsman to uphold a complaint even though a firm had observed all the FSA's rules and all the relevant legal provisions. We believe that that could be unfair to firms. It would also remove the level of certainty that firms need when devising their procedures under this regulatory regime. Therefore, this amendment proposes that the ombudsman will uphold a complaint only when the respondent has breached a rule or failed to satisfy a legal obligation or duty owed to the complainant.
Amendment No. 161YA repeats an amendment that we tabled in Committee. I shall explain again why we believe that the current provisions in subsections (4) to (7) of Clause 224 are unfair and should be amended in this way. At present, most of the existing ombudsman schemes include a provision along the lines of the current wording of subsections (4) to (7), which provides that the ombudsman's determination is not binding on the complainant but is binding on the respondent. The difference is that those schemes are voluntary schemes. They are not compulsory as is the scheme under this Bill.
There is a significant difference in principle in relation to voluntary schemes where the authorised person can choose to have the benefits of the scheme, knowing that the price that he has to pay is that any determination will be binding on him and not on the complainant. However, we believe that it is different where the authorised person has no choice about whether to join the scheme or not. It must be remembered that the complainant's position is already well protected, not least because the complainant chooses whether or not to refer a complaint to the ombudsman in the first place. We believe that if he decides to use the ombudsman scheme, he must accept that the ombudsman's determination will be binding on him.

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Amendment No. 161B relates to Clause 225(3) which provides that the ombudsman may award compensation of the same kind as a court can award for breach of contract. The issue here is that there are two different kinds of damages recognised by the law. The first is damages in negligence which are designed to place an investor back in the position he would have been in had he not been given poor advice. Typically, that is achieved by a return of the contribution that has been paid, plus interest to the investor where an unnecessary life assurance policy has been sold. That is the measure of compensation normally awarded to retail investors under the existing Financial Services Act.
By contrast, an award of damages in contract is intended to put the investor back into the position he would have been in had the contract been performed; for example, if an investor has been sold an investment with a guaranteed 9 per cent return, a court would compensate for any under-performance by requiring the firm to pay the guaranteed growth rate.
Under Clause 225(3), in most cases it will be appropriate for the ombudsman to award damages in negligence rather than in contract. It seems to us that the clause, as drafted, suggests that the ombudsman should award damages only in contract. Therefore, as indicated by our amendment, we believe that it is highly desirable for the words "or negligence" to be inserted at the end of the clause to make it clear that the ombudsman should award whatever compensation is appropriate in the circumstances and not necessarily compensation based only on breach of contract.
I turn now to the last in this group of amendments, Amendment No. 161C. This amendment amends Clause 226 which is concerned with the ombudsman's power to award costs. Again, Clause 226(3) provides that,
"Cost rules may not provide for the making of an award against the complainant in respect of the [company's] costs".
However, under subsection (4), these rules can provide for an award in favour of the company where, in the opinion of the ombudsman, the complainant's conduct was "improper or unreasonable" or,
"the complainant was responsible for an unreasonable delay".
In our view, this does not appear to be balanced. Authorised persons are bound to participate in the ombudsman scheme, but they have no redress even where the complainant acts improperly or unreasonably or has been responsible for unreasonable delay. Amendment No. 161C would allow the ombudsman scheme rules to provide for an award against the complainant in respect of the respondent's—the company's—costs in the same circumstances as already provided for in subsection (4). I beg to move.
The Chairman of Committees: Because Amendments Nos. 161A, 161B and 161C are being spoken to along with Amendment No. 161YA, I should point out to the Committee that if Amendment No. 161A is agreed to, I
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shall not be able to call Amendment No. 161B. If Amendment No. 161C is agreed to, I shall not be able to call Amendment No. 162.
10 p.m.
Lord Hunt of Wirral: I welcome the opportunity to explain the thinking that lies behind Amendment No. 161A. In doing so, I should like to mention my personal feelings about the ombudsman scheme. Noble Lords will know that for 35 years I have been a solicitor involved in advising insurance companies and their trade association, the Association of British Insurers, and the predecessor bodies.
Just under 20 years ago, as solicitor to two insurance companies in particular, I was one of the authors of the original industry scheme for the insurance ombudsman. After discussions with the National Consumer Council, we set up the scheme. Its themes could be described as informality, flexibility and speed. I believe that the scheme has been a tremendous success, as indeed have been the other schemes. I am moving this amendment in the hope that we shall retain that flexibility and speed in the new scheme, and I know that the chief ombudsman and his colleagues share that view.
What I and a number of other noble Lords seek to do in this amendment is to draw attention to what I believe to be a fairly obvious defect in the drafting of what is now Clause 225(3). Perhaps I may say how pleased I am to see sitting in their places the noble Lord, Lord Borrie, and the noble and learned Lord, Lord Donaldson of Lymington. I know that the noble Lord, Lord Phillips of Sudbury, would have been here had it been possible for him to be present. That is because we are all concerned about the defect which I shall explain and which I understand was brought to the attention of the Treasury as long ago as August last year. The Government have been on notice for several months as regards anxiety about the defect which is shared not only by the chief ombudsman, but also by the Financial Services Agency and the scheme operator whom we now know as the financial ombudsman service.
If ever there was a provision in the Bill that needs to be clear for ordinary consumers, surely this is it. Among all the provisions of the Bill, those concerning the powers of the ombudsman are most likely to be of interest to ordinary consumers. Furthermore, it is crucial for responsible members of the industry. It is of the utmost importance that everyone should be clear about the powers of the ombudsman in relation to the size and the make-up of money awards.
Of course, the whole purport behind the scheme is a reflection of the fact that the industry is rightly placing more emphasis on curing the problem as soon as possible. The FSA will be making rules to govern firms' complaints-handling activity. And most large financial service firms—banks and insurance companies—have in-house complaints-handling units. The current schemes, and indeed the new scheme, are intended to be a last resort after a complaint has been considered at senior level within a

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firm. On average, firms probably deal with between six and 10 times the number of complaints that the ombudsman ever receives.
Against that background, it is critical for complainants and their advisers to be clear about the powers of the ombudsman to make money awards. It would be most unfortunate if the ambiguity had to be the subject of regular argument before the ombudsman by sets of advisers, or, even worse, before the courts, before a clear interpretation could be established. That would do little for confidence in the industry and, indeed, for confidence in the scheme itself. Speaking as a solicitor, I feel strongly that the last thing the ombudsman scheme wants is intense learned argument over a considerable period of time.
The figures to which I have been referring as to the number of complaints handled by in-house complaints departments are not untypical throughout the industry. The cases that reach the ombudsman are, in effect, disputes that cannot be resolved even by the application of expertise and goodwill by experienced staff in complaints-handling units in industry. The complexity or novelty of the matters in issue, or perhaps the bitterness and lack of trust that may have developed, mean that the matter must be referred for independent adjudication. At that stage, therefore, when a matter is referred to the ombudsman, he must expect the parties to an unresolved dispute to be at loggerheads. It would be unfortunate, therefore, if there were further room for dispute over the ombudsman's powers because this House had failed to enact a clear provision.
I have envisaged situations where a financial firm complained of had the benefit of professional advice. But many will not seek advice. The whole ombudsman scheme is designed to be used without professional assistance. Let us consider a dispute with an investor over what is alleged to have been negligent advice. Both might stare long and hard at the words of this subsection before trying to guess its meaning, and that is the topic I want to address.
Let me for a moment reflect on the process that the Bill provides for a determination to be made. Clause 224 empowers the ombudsman to determine a complaint on the basis of what is "fair and reasonable". That is clearly wider than the definition used within a court. For example, the ombudsman might conclude, "I find that, while this company has not broken any rule or legal duty, it behaved unfairly towards the complainant and that behaviour caused the complainant financial loss of X amount and much anxiety and distress". On that basis the complaint is upheld. But what redress can follow? That is where the problem arises.
Under Clause 225, the ombudsman can either make a direction or a money award. By virtue of Clause 225(2)(b) the ombudsman may make a direction the financial consequences of which are unlimited and such a direction can encompass requirements that courts are unable to make. So in the case we are considering, the ombudsman could, for instance, direct that the institution should
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apologise; that it should write to other organisations reassuring them about the complainant's creditworthiness if that had been put in doubt; that it should reconstitute the complainant's account, as directed, and should treat as valid certain transactions it had purported to invalidate. All these matters are within the ombudsman's power even though the cost might exceed the monetary limit. They are certainly powers which are not exercisable by a court—that is my key point—nor rightly does the subsection try to constrain the ombudsman's powers by reference to the powers of a court. Such is the wide variety of possible remedies that might be appropriate in a scheme where disputes need to be settled with the minimum of authority than the power of the ombudsman needs to be generously defined.
But when considering a money award, the Bill adopts a very different approach. The ombudsman must then look to Clause 225(3) and try to understand what it means. In a money award he is required only to compensate for the kinds of loss or damage for which a court could order,
"if it were deciding an action for breach of contract".
What on earth does that mean?
There are two very different possible interpretations of that provision. The first could follow these lines: the ombudsman is permitted to construct a hypothetical contract which contemplates any form of loss or damage as potentially resulting in an award of damages for a breach of that hypothetical contract. If it is possible to envisage any contract resulting in the kind of loss for which a court could award, then the ombudsman can make an award. I shall not go into any further detail on that matter.
The second possible construction is that the ombudsman must look to the actual contract entered into by the complainant and the respondent and then consider the kind of damages that a court would have power to award for breach of that particular contract. But the problem with that interpretation is that often there will be no contract at all. What the complainant complains about is, for instance, that he has been wrongly discriminated against and has been unable to take out a contract so there is not one. Alternatively, he is a third-party beneficiary under a trust or an insurance policy and under those circumstances he is not party to a contract at all. Even if he is party to a contract, that approach might turn out to be too narrow, depending on that, if anything, which is finally specified under subsection (3)(b).
I hope that I am taking the Minister with me so far because this is such a crucial and critical point. Surely it would be absurd for the ombudsman to declare, "I find that this complaint should be upheld on the basis that in my opinion it would be fair to do so, even though a court would not. However, I am unable to award compensation for the complainant because a court would not do so".

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There appears to be a clash here between the requirement that the ombudsman should determine the outcome of complaints on a basis different from and wider than that used by the courts on the one hand, and the attempt to constrain the money awards that the ombudsman may make by reference to the powers of the court.
We have to remember that these provisions may have to be interpreted in the courts. It is that which I am seeking to avoid. In a similar context the courts have been found to be very cautious about interpreting generously provisions such as these. Unless clear words are used on the face of the legislation the courts normally say that the powers of decision-makers are to be construed no wider than the powers of the courts themselves. That is the approach that the courts have taken to quite similar provisions in the legislation relating to the powers, for example, of the pensions ombudsman. That ombudsman will be very different from the one proposed here. The courts will have their minds lead to such precedents.
My amendment and that of my noble friend, seek to clarify matters. It would make a more natural and commonly recognised distinction between financial loss under paragraph (a) and other forms of loss or damage under paragraph(b). The policy aim in separating all this is that the authority should be enabled to impose a separate limit on these forms of loss or damage under paragraph (b). I believe that the amendment would permit that to be done.
In proposing this amendment I am seeking to assist the Government to get this rather important clause right and to make sure that it is clear on the face of the Bill. There is a clear and recognised ambiguity here. I hope that it will be accepted that this ambiguity can be eradicated by enacting my amendment. The Minister may say that it is not a perfect amendment—I do not know yet. It can be argued that the expression "financial loss" should be expanded so that it could refer to future uncrystalised losses. Some people may prefer that, as a matter of policy, the authority should specify the heads of loss or damage if these are to be the subject of a separate limitation. However, these issues are of less importance than the ambiguity contained in the main provision.
I am aware that disquiet has been expressed by the FSA and by the ombudsman about the drafting of the clause. The concern was also shared by the current ombudsman schemes. I could quote from the letter from the chairman of the Council of the Banking Ombudsman dated 26th January of this year, but the Minister will be aware of that communication. Therefore, I shall just make a passing reference to it. When the Economic Secretary replied on 14th March, he said:
"It is, of course, the Government's intention that the meaning of these provisions should be clear, and I have therefore asked my officials to consider whether the clause needs amending".
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I hope that my noble friends and I have given the Government that opportunity.
Lord Borrie: My Lords, I should like to express my support for the amendment to which the noble Lord, Lord Hunt, has just been speaking. He has explained the amendment so admirably that I do not feel that I need to add to his explanation. I shall simply express my support and point out that the amendment to which my name is attached is a constructive measure and one which will be helpful in trying to explain more clearly what we all believe is the intention behind the clause; namely, the way in which the ombudsman should determine the amounts that he might award.
I wish to speak about the other amendments in this grouping, which were spoken to by the noble Lord, Lord Saatchi. I shall leave one of those amendments aside—the one referring to negligence which would be unnecessary. It cannot be read along with the amendment to which the noble Lord, Lord Hunt, myself and others have subscribed. In my view, the other three amendments to which the noble Lord, Lord Saatchi, spoke are wholly retrograde and undesirable. They show either a misunderstanding of the ombudsman system that we have come to know over many years, or a distrust or dislike of the system. I do not know which it is.
Noble Lords will already be aware that the private sector ombudsman, starting with the insurance one, began in the early 1980s—so I suppose that it has reached its majority. The parliamentary ombudsman dates back to 1967 and is concerned with matters other than breach of the law. He also deals with maladministration, if I may use the omnibus word in respect of what that particular ombudsman deals with and, similarly, do so in respect of the other ones in the public sector. The reason why I suspect a certain misunderstanding of the ombudsman system is that all of them are concerned with what one might call fairness, reasonableness and equity; they are not just concerned with the narrow question of whether someone has broken the law or certain rules.
Clause 224(2) says that the ombudsman's determination shall be on the basis of what is,
"fair and reasonable in all the circumstances of the case".
That is disliked by the Opposition Front Bench, but it follows the precedent of ombudsman schemes that I have described. I must stress that it is not intended under existing systems—or, indeed, under this Bill—that the ombudsman scheme should be a court of law.
The noble Lord, Lord Saatchi, did not mention the fact that the compensation awards are limited. The Minister will correct me if I am wrong, but I understand that it is intended that the limit of what the ombudsman can award in this area is 100,000, even in the most serious cases. Of course, if someone wishes to pursue a legal claim for more than that, he or she has the right to go to court.
That brings me to the point of how important it is that the right to go to court should be retained. In my view it should be retained until the very moment when the complainant accepts an award that has been made

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by the ombudsman. I believe that it is quite wrong for the Opposition Front Bench to suggest that the complainant should be forced to choose—ex ante, as it were, before he approaches the ombudsman at all—between a court of law and the ombudsman.
I suggest that there is a misunderstanding here. All the ombudsman schemes, including the one in this Bill, are surely designed with the idea that people should be encouraged to use them rather than a court of law. This is achieved by making the ombudsman scheme informal, by not involving lawyers and costs and certainly not by doing what the noble Lord, Lord Saatchi, wants; namely, to impose a risk that if the complainant loses his case he may have to pay the costs and the costs of the lawyers engaged by the other side. Each and every one of the three amendments which the noble Lord, Lord Saatchi, has tabled in the group we are discussing are to my mind wholly retrograde to what I might call "ombudsmanship", if there is such a word. The whole essence of the ombudsman arrangements is informality. They seek to avoid the rule that costs should follow the event; that if one loses one pays the other side's costs; and the matter of being compelled to choose between an ombudsman and a court of law right from the start.
I remind the noble Lord, Lord Saatchi, that even in the courts lawyers have recognised, at least for 20 or 30 years, that the costs rule in civil cases often has a retrograde and discouraging effect on people taking perfectly good and reasonable cases to court because they are so worried that if they lose they will have to pay the uncertain, unknown figure of costs that the other side incurs with their lawyers. Hence in the 1970s—Conservative Lord Chancellors agreed with this approach—one could bring small claims to the County Court satisfied in the knowledge that if one failed one would not have to pay the other side's costs.
I find it amazing that in the year 2000 the noble Lord, Lord Saatchi, should want to apply to the ombudsman schemes a rule that has fallen into a certain amount of desuetude, and certainly dislike, in the ordinary courts of the land. I am extremist in my views on this group of amendments. I am wholly in favour of the amendment that is proposed by the noble Lord, Lord Hunt. Noble Lords will notice that it is supported by the Cross Benches, the Liberal Democrats and a Back-Bench Conservative former Cabinet Minister. It is wholly worthy of support. The amendments proposed by the noble Lord, Lord Saatchi, on the other hand, are wholly worthy of dismissal.
10.15 p.m.
Lord Newby: My Lords, I speak to Amendment No. 162, which stands in my name and that of my noble friend Lord Sharman. I wish to comment also on other amendments in the group that we are discussing.
Like the noble Lord, Lord Hunt, we on these Benches believe that the principles of informality, flexibility and speed should characterise the work of the ombudsman in this area, as with other
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ombudsmen. We believe too in the principles of ease of access and cost-free access. Those principles informed our view of all the amendments in this group and led to the tabling of the amendment in our name.
As our amendment has not yet been spoken to, I should remind your Lordships that it seeks to delete subsection (4), which allows cost awards to be made, to put it in shorthand, against a vexatious litigant. I am sorry that even in his extremism the noble Lord, Lord Borrie, did not speak in support of this amendment. Given the arguments that he made, it is an amendment that is worthy of his support.
As I understand the situation at the moment, there are a number of ombudsmen in the financial services sector and a number of ombudsmen in other sectors. As a general rule, costs are not awarded, in any circumstances, against anyone who brings a case to the ombudsman. Obviously in some cases it may be the view of the ombudsman—it may be the view of a reasonable man or woman—that the person bringing a case to the ombudsman is absolutely obsessed by something which has no merit. But it is a part of the role of the ombudsman to deal with such cases, as well as to deal with cases that are very well founded.
If we get to a situation where ordinary people—not only obsessives—when considering what action to take after being badly done by feel that they may run into a costs award against them, this will deter the very people who should be applying to the ombudsman for redress from doing so because they will be worried that they will not be able to pay the costs. In our view, it is not a part of the plan for the ombudsman to be draconian in this respect, but, as long as this provision remains on the statute book, it will deter from going to the ombudsman the kind of people the scheme is designed to benefit.
At the same time, it will do nothing to deter the obsessive. A person with a burning grievance will take it to the ombudsman; if the ombudsman turns it down, he or she will pursue it through the courts until they reach the end of every conceivable level of redress. Not only is it wrong in principle, but it will be ineffective in practice. It will not stop the vexatious litigant from applying to the ombudsman. I urge the Government to drop this measure.
As to the other amendments, it almost goes without saying that we oppose Amendment No. 161C, which would broaden the scope for making cost awards against people bringing cases to the ombudsman. We support Amendment No. 161A. It is constructive and clarificatory and we hope that the Government will support it.
I apologise for taking the amendments in reverse order. We oppose Amendment Nos. 161ZA and 161YA. Amendment No. 161ZA would exclude a raft of cases which fall under the general heading of "maladministration" rather than a formal breach of rules. If an ombudsman is there to do anything, he is there to look at cases of plain, straightforward maladministration which the "maladministrator"—if that is the right word—refuses to accept. We believe

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that Amendment No. 161ZA would unduly constrain the kind of case in which an ombudsman can make a determination.
As the noble Lord, Lord Borrie, said, Amendment No. 161YA appears to require a potential complainant to the ombudsman to decide, before making a complaint, whether to go down the ombudsman route or the court route. This is an unnecessary and unsatisfactory choice to require people to make. It may force some people to decide on a court route who would receive a perfectly satisfactory outcome through the ombudsman route, which must be a preferable way of dealing with these issues.
In moving this amendment, the noble Lord, Lord Saatchi, said that one of the thoughts behind it was that this was a compulsory scheme rather than a voluntary scheme, and that that put it in a different category from other ombudsman schemes. That is a complete red herring. I do not see the relevance of that argument at all. Everyone, including the noble Lord, Lord Saatchi, believes that this scheme should apply across the board in the financial services sector and therefore the broad principles which apply to ombudsman schemes elsewhere should apply to it. Therefore, I would not support Amendment No. 161YA. We look forward to hearing from the Minister that he is prepared to move that little distance by agreeing to Amendment No. 162.
Lord Donaldson of Lymington: My Lords, I, too, look forward to the Minister saying that. I shall speak briefly to the amendments because they have been so fully explained.
If Amendment No. 161YA were accepted the ombudsman would be confined to dealing with cases where there had been a breach of a rule or a failure to satisfy a legal obligation. I am sure that that would be very restrictive. As has been pointed out, there have been cases of maladministration or just plain rudeness which do merit consideration by the ombudsman and in some circumstances would undoubtedly merit an award against the respondent. I know that it looks odd that one should have a unilateral ombudsman scheme—a one-way street—in which the complainant can take the matter up to, but not as far as, the award and then say, "I have not done very well here. I shall now go off to a court. Perhaps I shall do better there". But that is not what happens.
The proof of the pudding is that over many years this has been the pattern for all the ombudsman schemes. The dialogue that takes place between a complainant and the ombudsman, including very often a draft award telling the complainant what the award would contain if he persisted, has settled the matter completely. It may be illogical but it works. If ever there was a case for leaving it to work, this is it. We are not trying to invent a new ombudsman scheme. We are merely trying to rationalise a large number of ombudsman schemes, almost all of which have in common the feature that the respondent can be caught by an award but not the complainant.
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I shall move briefly on to Amendment No. 161B. I respectfully suggest to the noble Lord, Lord Kingsland, although he is not in his place, that he does not mean "negligence". He means "tort". There are many things such as defamation and the like which come under that broader heading. I just thought that I might put in my two penn'orth on that one.
Amendments Nos. 161C and 162 deal with costs. I have never litigated, except on one occasion, for fear of the costs. Perhaps I may describe the occasion when I did it. I had gone round advocating that people should put a legal expenses addition to their household comprehensive policy. The time came when I thought that I should perhaps put my money where my mouth was, provided that it was not too much money. I discovered that it was only £10 and so I did it. I then found myself in dispute with a marine surveyor and handed over the matter to the legal expenses insurers, who took it from there. It was very satisfactory. I was insured against any liability to the other side in respect of costs. This scheme will fail if people are frightened of costs.
That brings me to the amendment to which I subscribe. I agree with all the reasons which have been given. I had to ring the chief ombudsman and ask what are the rules for damages in contract. He told me about it—he reminded me of it is a better way of putting it. They are very limiting—much more limiting than they ought to be, even in regard to court cases. They certainly have no place here. I very much hope that the Minister will be able to accept our much broader suggestion.
10.30 p.m.
Lord Boardman: My Lords, I have been concerned with the creation of certain ombudsman schemes during my time in business. To the best of my knowledge, they have all worked satisfactorily from the point of view of the organisations that established them and the number of complainants whose core complaints have been met. I agree with the remarks of my noble friends Lord Saatchi and Lord Hunt of Wirral regarding the essential requirements, the fact that they can be dealt with speedily and the way in which awards were made—somewhat generously, but not generously in terms of the cost if people had suffered through their problems not being met or going to the courts.
I support the amendments. Two queries have been raised regarding the proposals of the noble Lord, Lord Saatchi. The matter of negligence was raised by the noble Lord, Lord Borrie. I interpret that as a measure of assessing the damages which could properly be awarded by an ombudsman, taking into account the various circumstances. To that extent negligence widens the field rather more than was otherwise appropriate.

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The second relates to costs. I am not sure that I understood the noble Lord, Lord Newby, but as I understand it his amendment strikes out all reference to costs. Yet the noble Lord explained that costs seemed essential to stop someone going from court to court and running them up. Whatever the noble Lord's reasoning, I believe that the provision of a deterrent in the form of costs to stop the aggressive litigant abusing the system is quite a good thing. Such a provision should be used with considerable discretion. The costs certainly should not follow the event. But if someone abuses the system by making unreasonable complaints, it should be up to the ombudsman to provide a deterrent for the future by awarding costs against that person. Subject to those qualifications, I support the amendments that have been proposed.
Lord Bach: My Lords, on behalf of the Government, let me try to take a rather tricky walk down the middle of the various amendments, incompatible as they are.
When we considered a similar clutch of amendments in Committee, I prefaced my remarks by explaining that the purpose of the ombudsman scheme was to provide a quick, cheap and informal mechanism for resolving disputes between authorised firms and consumers. It was also mentioned that over 80 per cent of complaints under the schemes we are replacing were resolved between the parties without the ombudsman having to take a decision one way or another. That is important, because it sets in context questions about who should be bound by the determination and on what basis such determinations should be reached. These issues do not even arise in the vast majority of cases.
I turn first to Amendment No. 161YA, proposing that decisions should not bind respondents. The amendment deals with the question of whether the ombudsman's decision should be binding on the complainant. This question has been raised before and has been given careful consideration. We believe that the approach taken in the Bill is the correct one. It is fundamental to the character of an ombudsman scheme that decisions should not be binding on complainants. Existing schemes are based on that premise. They provide consumers with an alternative to court action but do not deprive them of their legal rights at any stage before they decide to accept the determination. We do not believe that it would be appropriate in any way to design a new scheme in such a way as to put consumers in a less favourable position than under current schemes.
Apparently, over the past number of years, in general, complaints have been upheld only in a minority of cases: roughly 30 per cent in insurance, and roughly 40 per cent in investment matters. In the majority of cases complainants are disappointed.
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However, experience is that over the past 20 years a handful of dissatisfied complainants have gone on to take advantage of their right to pursue maters by way of court proceedings. If complainants were required to choose between the ombudsman route and abandonment of their legal rights—that might well be the effect of the amendment if passed—or to preserve their rights by issuing proceedings, it is possible that many more would choose the court route. We believe it is unlikely that that outcome will be welcomed by the financial services industry, and we invite the noble Lord, Lord Saatchi, to withdraw his amendment.
Amendment No. 161ZA relates to Clause 224. It is perhaps helpful if I explain briefly the basis on which we believe that the ombudsman should determine cases for which the Bill makes provision. We believe it is right to require the ombudsman to determine cases on the basis of what is fair and reasonable in all circumstances. Existing schemes determine cases on that basis. We believe that this arrangement has worked well, as a number of noble Lords have said this evening, and it should continue. The scheme must be quick and informal. It would be wrong to constrain the ombudsman by requiring a purely legalistic focus, or a focus on rules to the exclusion of everything else. To do so might mean that he was unable to examine all the matters, such as delay or maladministration, which were relevant to a complaint. We would certainly expect the ombudsman to take into account, where relevant, the matters mentioned in the amendment—breaches of rules or legal duties and obligations—but it would be too prescriptive to limit his role to those matters.
I turn to the first set of incompatible amendments: Amendments Nos. 161A and 161B. Amendment No. 161A in particular, with no disrespect to Amendment No. 161B, gives us some food for thought. These amendments deal with the provisions under which the ombudsman will be able to make awards of compensation for loss or damage suffered by complainants. I briefly outline the intended purpose of Clause 225(3) which has been subject to some gentle but severe criticism during the course of this evening's debate. Ombudsmen have traditionally made awards which reflect not only financial loss and other losses compensable in general commercial matters but other matters such as distress and inconvenience. Clause 225(3) is intended to allow that to continue while ensuring that the ombudsman's power to make awards for loss or damage not generally compensable in commercial litigation is limited to matters specified in rules made by the FSA.
Subsection (3)(a) is intended to cover losses for which damages would be recoverable in a breach of contract action. Subsection (3)(b) is intended to allow the FSA to specify other types of loss in respect of which the ombudsman can award compensation. We believe that that approach strikes the right balance and allows the ombudsman sufficient discretion to award compensation while ensuring clarity for the industry in respect of awards for loss or damage not generally compensable in commercial litigation.

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We have some concerns about Amendment No. 161A. We believe that that amendment, spoken to notably by the noble Lord, Lord Hunt, which removes the requirement that awards under paragraph (b) should be specified in rules, rather detracts from what we seek to achieve. We do not believe that Amendment No. 161B is appropriate. I do not want to go into details at this stage. The noble and learned Lord, Lord Donaldson, suggests that "tort" is better than "negligence" but that neither is appropriate. The Government also take that view.
We have listened with care to, and will read with even greater attention, the points made this evening and consider whether we can do anything to clarify Clause 225. If it is appropriate to do so we shall table an amendment at Third Reading. It may be that the days in between could be taken up by some discussion on possible ways round this. I do not want to hold out too much hope of movement, but we have been impressed by the arguments that have been put forward, particularly in relation to Amendment No. 161A. In view of that, I hope that the noble Lord, Lord Hunt, will not press his amendment at this particular stage.
Now I move to Amendments Nos. 161C and 162. They deal with the provisions under which the scheme operator can make rules allowing the ombudsman to award costs. We discussed similar amendments in Committee and I can assure noble Lords that we have given full and careful consideration to these provisions since that discussion.
Clause 226 as it stands allows no scope for the ombudsman to make an award of a firm's costs against a consumer. We believe that is right. The scheme is intended to provide consumers, many of whom simply will not have the resources to pursue a case through the courts, with a free means of redress. To allow a firm's costs to be awarded against a consumer could discourage consumers from using the scheme. Indeed, if such an amendment is passed, it is arguable that responsible financial companies might arm themselves with lawyers as soon as a complaint was lodged, and the ombudsman scheme would then have to make the complainant aware that he was at risk of payment of costs if he pursued his complaint.
That might be a really serious inhibition on consumers pursuing complaints. Of course we recognise that the amendment of the noble Lord, Lord Saatchi, (Amendment No. 161C) would allow such awards to be made only where the consumer had behaved improperly or unreasonably, but we still do not think that the changes proposed are desirable. We want to make sure that any action that could be taken in response to improper or unreasonable behaviour is, and is seen by consumers considering whether to use the scheme to be, controlled and proportionate. A respondent's costs could be very high, and they are beyond the control of the scheme operator.
Turning to the amendment of the noble Lord, Lord Newby, to protect against the possibility that consumers may misuse the scheme, the Bill allows the
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ombudsman—this is what the noble Lord seeks to delete—in limited circumstances to make an award of the scheme operator's costs against a complainant. We want to emphasise once again that there is no scope under the Bill for the ombudsman to award costs against a complainant, except where that person has acted improperly or unreasonably or has been responsible for unreasonable delay. We expect an award to be made only in extreme cases and only after prior warnings had been given to the complainant.
In addition—and this we consider important—the ombudsman cannot award costs against any consumer at all, even if they have behaved badly, improperly or unreasonably, unless rules have been made to allow it. The authority and the scheme operator have made it clear that there are no plans at present to allow the ombudsman to make such awards. Such rules would be made only if, in the light of experience, it proves necessary to do so.
Therefore I would describe the authority's attitude about this as being a "reserve" reserve power. The rules are not there: there is no intention to make them. They would be made only if it was thought appropriate to do so, and thus no award could be made until the rules were made.
The scope of the power to award costs to consumers who behave unreasonably or improperly is clearly defined. We would expect it to be used only in the worst cases—my next three words are important—if at all. However, we do think that it is important to have it in the Bill against potential abuse of the scheme. The scheme will give consumers access to a coherent and effective mechanism for seeking redress, and it is only fair to ask that those consumers use the scheme responsibly. It is in that context that I invite the noble Lord, Lord Newby, not to move his amendment.
Lord Saatchi: My Lords, I am grateful to noble Lords who have taken part in the short debate on this important scheme which we fully support. As I said, we see some anomalies. I can understand the merit of the amendment in the name of my noble friend Lord Hunt. He has highlighted a key point about the vagueness of the concept of a breach of a notional contract. I was encouraged by the Government's response.
However, having heard my noble friend Lord Hunt and other noble Lords describe the many merits of their amendment, I am even more confident about the merits of our amendments. The noble Lord, Lord Borrie, said that he wants more informality. That is fine. But we want more balance—if that means more formality, we say, "So be it"—so that the ombudsman will not be able to uphold complaints where a firm has observed all the FSA's rules and will be able to make claims against an unreasonable and improper complainant. I should like to test the opinion of the House.
10.45 p.m.
On Question, Whether the said amendment (No. 161YA) shall be agreed to?
Their Lordships divided: Contents, 17; Not-Contents, 86.

Division No. 2

CONTENTS

Astor of Hever, L.

Lindsay, E.

Blatch, B.

Mackay of Ardbrecknish, L.

Boardman, L.

Montrose, D.

Burnham, L.

Moynihan, L.

Northbrook, L. [Teller]

Dundee, E.

Northesk, E.

Henley, L.[Teller]

Norton of Louth, L.

Home, E.

Saatchi, L

Kingsland, L.

Skelmersdale, L.

NOT-CONTENTS

Acton, L.

Howie of Troon, L.

Alli, L.

Hoyle, L.

Amos, B.

Hughes of Woodside, L.

Archer of Sandwell, L.

Hunt of Kings Heath, L.

Bach, L.

Irvine of Lairg, L. (Lord Chancellor)

Bassam of Brighton, L.

Berkeley, L.

Jay of Paddington, B. (Lord Privy Seat)

Blackstone, B.

Borrie, L.

Lea of Crondall, L.

Brett, L.

Lipsey, L.

Brooke of Alverthorpe, L.

Macdonald of Tradeston, L.

Brookman, L.

McIntosh of Haringey, L.

Burlison, L.

McIntosh of Hudnall, B.

Carter, L.[Teller]

MacKenzie of Culkein, L.

Chandos, V.

Mackenzie of Framwellgate, L.

Christopher, L.

Massey of Darwen, B.

Cocks of Hartcliffe, L.

Morris of Castle Morris, L.

Cohen of Pimlico, B.

Newby, L.

Craig of Radley, L.

Pitkeathley, B.

Crawley, B.

Plant of Highfield, L.

Davies of Oldham, L.

Prys-Davies, L.

Donaldson of Lymington, L.

Ramsay of Cartvale, B.

Dormand of Easington, L.

Rea, L.

Rendell or Dabergn, B.

Dubs, L.

Richard, L.

Elder, L.

Sainsbury of Turville, L.

Evans of Parkside, L.

Sawyer, L.

Farrington of Ribbleton, B. [Teller]

Scotland of Asthal, B.

Sewel, L.

Faulkner of Worcester, L.

Sharman, L.

Filkin, L.

Sheppard of Liverpool, L.

Gale, B.

Simon, V.

Gavron, L.

Smith of Gilmorehill, B.

Gilbert, L.

Smith of Leigh, L.

Goldsmith, L.

Stone of Blackheath, L.

Gordon of Strathblane, L.

Symons of Vernham Dean, B.

Goudie, B.

Taverne, L.

Gould of Potternewton, B.

Thornton, B.

Grenfell, L.

Tomlinson, L.

Hardy of Wath, L.

Warner, L.

Harris of Haringey, L.

Warwick of Undercliffe, B.

Harrison, L.

Wedderburn of Charlton, L.

Hilton of Eggardon, B.

Whitaker, B.

Hollis of Heigham, B.

Whitty, L.

Howells of St Davids, B.

Williams of Mostyn, L.

Resolved in the negative, and amendment disagreed to accordingly.
10.56 p.m.
[Amendment No. 161ZA not moved.]
Clause 225 [Awards]:
[Amendments Nos. 161A and 1618 not moved.]
Clause 226 [Costs]:
[Amendments Nos. 161C and 162 not moved.]
Clause 232 [Open-ended investment companies]:
Lord Kingslandmoved Amendment No. 162A:
Page 122, line 28, at end insert—
("(4A) In determining whether the investment condition is satisfied, participation in the scheme shall he deemed to take place either at the time shares in, or securities of, BC first become available for purchase or subscription by investors or on any occasion thereafter on which the arrangements constituting BC are changed to a material extent.").
The noble Lord said: My Lords, Clause 232 sets out the new definition of open-ended investment companies. Amendment No. 162A is intended to raise a number of issues relating to the definition that we would like to have clarified.
As I said to your Lordships in Committee, broadly we welcome the definition but we believe that it has a potential flaw. The flaw is that the question of whether or not an entity is an open-ended investment company depends on the expectations of a reasonable investor participating in the collective investment scheme in relation to his ability to realise his investment.
The expectations of a reasonable investor may well differ depending on when the investment is treated as taking place. As a result, the categorisation of a collective investment scheme will depend not on the nature of the scheme itself but on what an investor's expectations may be at a particular moment in time.
I can illustrate that by reference to an example. The example assumes that subsection (4) of Clause 232 is not a desistance. An investment company is launched in year one and states that in year five it will redeem at net asset value the shares of any investor who wishes to have the shares redeemed. After year five there will be no further opportunity for investors to have their shares redeemed. I would suggest that at year one the company would not be an open-ended investment company because a reasonable investor in year one would not expect to be able to realise his investment within a reasonable period—five years being too long a period for these purposes. However, in year four a reasonable investor may expect that he would be able to realise his investment within a reasonable time—one year possibly being a reasonable period for these purposes.
Does that mean that at that point the company converts from being a closed-ended to an open-ended investment company? After year five, the opportunity for investors to have their shares redeemed would have passed. Investors would no longer have an expectation of realising their investment within a reasonable period. Does the company then become a closed-ended investment company again? I should be interested to hear the Minister's response.
In Committee the noble Lord said:
"The investment condition operates in relation to the company itself. It does not concern a particular point in time at the end of the company's life. Focusing on that particular point in time does

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not give an impression of the nature of the company; it is the nature of the company that counts as far as concerns the definition in the new clause". [Official Report, 9/3/2000; col. 944.]
That is a helpful statement but I believe that my example will have demonstrated that, inevitably, the question of whether a company is an open-ended investment company will be asked at points in time. At those points in time, the expectations of the reasonable investor must be considered and those expectations will change, leading to the consequences I have tried to illustrate.
Our suggested Amendment No. 162A deals with the issue by asking the question at the launch of the company, when shares in the company become available to purchase for the first time, and on each occasion thereafter when the constitutional arrangements of the company—typically, its articles of association—are changed to a material extent.
Minor variations to the articles of association—for example, to comply with listing rules—would be unlikely to result in a significant change to the constitution of the company. Therefore, we propose that those are ignored. The amendment is only a suggestion to meet the concerns that I have outlined.
When replying, I should be grateful if the Minister will deal with the following additional questions. First, when considering the reasonable investor and his expectations about realising his investment, is it necessary to consider the entirety of the investor's investment? In other words, if the investor has a reasonable expectation that he will be able to realise only half of his investment but not the whole of his investment within a reasonable time, would that satisfy the investment condition in subsection (3)?
Secondly, will the Minister please clarify what is meant by,
"calculated wholly or mainly by reference to the value of property",
in Clause 232(3)(b)? If the realisation price was equal to a Stock Exchange quoted price for the shares, I assume that that would not be calculated wholly or mainly by reference to the value of property in respect of which the scheme makes arrangements. Does the reference to "property" mean the actual property of the scheme or property of the same kind? Perhaps the word "the" should be inserted before "property" to make that point clear.
Again, what is the position if part of an investor's investment is realised on a basis,
"calculated wholly or mainly by reference to the value of property",
and part is calculated on a different basis?
One final point I should like to make is that the FSA will be able to give guidance under Clause 153 in relation to the interpretation of Clause 232, assuming that the FSA's power to give guidance with respect to the operation of the Act covers guidance on the interpretation of the definitions in the Act. However, any FSA guidance on the meaning of Clause 232 can
1496
only ever be the authority's view of what the clause means. Only a court will be able to determine what meaning should be given to the clause. I beg to move.
11 p.m.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord, Lord Kingsland, for his recognition of the Government's achievement in Committee in framing a generally acceptable definition of an open-ended investment company, although he rather spoiled it by the criticisms that he made thereafter of what I thought had gained fairly general agreement, not only in this House but in the long and fruitful consultation with industry representatives. We thought then, and think now, that we have a robust, targeted and flexible definition of an OEIC.
I stress the flexibility because the definition has to serve a number of purposes. It describes the number of companies that can be incorporated and carry on collective investment; it determines the companies to which regulations are made by the Treasury and rules made by the authority in relation to OEICs supply; and more importantly it determines the companies constituted outside the UK that are caught by the rules and regulations relating to OEICs and to collective investment schemes generally.
Largely because of that final purpose—companies constituted outside the UK—the amendment proposed carries significant risks. It reduces the flexibility of the definition by putting a qualification on the investment condition leg. As the House will recall, the definition of an OEIC in Clause 232 is framed by reference to two conditions: property and investment.
The noble Lord, Lord Kingsland, asked about the property condition. As his amendment refers to the investment condition only, I hope that he will forgive me if I deal with the matter in writing.
The investment conditions contain a requirement that a reasonable investor would, if he were to participate in the scheme, expect that he would be able to realise, within a time appearing to him to be reasonable, his investment in the scheme. That allows his expectation in relation to participation at any time in the life of the scheme to be considered.
The amendment proposes that the clause should specify the points of time by reference to which a potential participant's view of his ability to realise his investment in the scheme can be considered. Participations would be limited to the times when the shares in, or the securities of the companies first become available for purchase or subscription, or when, thereafter, the arrangements constituting the company are changed to a material extent.
As I said in Committee, the definition deliberately does not specify a time at which the open-endedness of a company must be considered. It is important that the nature of the company can be judged at any time.
The amendment would exclude from the definition, for example, a company that offered investors no right to redeem their investments for the first, say, six

1497
months after its shares became available for subscription. At that point, a reasonable investor would be likely to consider that, were he to participate in the scheme, he would not be able to realise his investment within a reasonable time. However, the same scheme could offer continuous redemption from the six-month point onwards without any change, material or otherwise, to the arrangements constituting it. But it would still not meet the definition of an OEIC.
Of course, it is essential that shares are capable of coming within the definition of an OEIC so that the rules and regulations covering collective investment schemes, for example in relation to the promotion of schemes, apply to it. Whereas Treasury regulations and FSA rules will determine the nature of OEICs that can be established in the UK, the definition has to apply to overseas established schemes as well, over whose constitution the UK authorities have no control. It is imperative that the OEIC definition is broad enough to cover a variety of such schemes that are capable of offering collective investments.
This is a new type of scheme that has been growing rather rapidly. The nature of OEICs that are being set up varies. If we were to start to lay down restrictions of the sort that are proposed by this amendment, we would run a serious risk of strangling the baby not quite at birth but in early infancy. We want OEICs to exist. They are valuable investment schemes. It is important that they should be allowed to exist and to be regulated. It would be a great shame if a restriction of this kind, which seems to be largely formalistic, were to endanger the possibility of new forms of OEICs that conform with the general definition that we agreed in Committee.
The noble Lord, Lord Kingsland, asked for an example of company changes over the years. Over time, it is perfectly possible for a company to change from closed-ended to open-ended investment. It is right that from time to time the assessment should be made. In that sense the definition is designed to be "ambulatory"—I believe I understand what that means. A hypothetical reasonable investor looks at the type of company in which he is considering investing and forms a view as to the nature of the company in the example given. The fixed term company will probably fall to be considered as a closed-ended company throughout its life, even though in its final year a view may he taken that redemption of the investment could be achieved within a reasonable period.
We cannot allow a loophole of the kind that would he provided by this amendment. More generally, the Committee will recall the government amendment in Committee which introduced a power for the Treasury to amend the OEIC definition should that become necessary. For that reason, restricting the definition, which this amendment would do, would run counter to the approach the Government are seeking to adopt here. We are deliberately looking for a broad and flexible definition, one that captures the essence of the beast while still allowing changes to be made if experience shows that they are needed. As I said in Committee, any order making such a change would be
1498
subject to the affirmative resolution procedure. I hope that, on the basis of the arguments I have put to the Committee, the noble Lord will not press his amendment.
Finally, government Amendment No. 219 is a consequential amendment arising from the changes made in Committee to the definition of an open-ended investment company.
Lord Kingsland: My Lords, with great respect to the Minister, I think it is a little rich of him to suggest that we are trying to stifle enterprise by seeking greater precision in the Bill. I believe I can honestly say that throughout the proceedings on the Bill we have sought greater precision in order to encourage enterprise, because the greater the amount of imprecision there is, the greater will be the uncertainty for those who must operate under it. The greater that uncertainty, the more likely it will be that people will become less resourceful. The whole object of seeking greater precision in these definitions is to encourage enterprise and to make OEICs work—as the Minister put it so evocatively.
Despite what the Minister has said, I hope that over the next few days he will reflect on the enhanced quality that the Opposition believe this amendment would bring to the Bill so that on Third Reading at least a little movement might be seen on this. I hope very much that we shall not have to discuss this matter again at that stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 253 [Directions]:
Lord Kingslandmoved Amendment No. 162B:
Page 123, line 16, leave out from ("communicate" I to end of line 17 and insert—
("to a person in the United Kingdom—

(a) an invitation to participate in a collective investment scheme; or

(b) information which is intended or might reasonably be presumed to be intended to induce any person to do so.").

The noble Lord said: My Lords, Amendments Nos. 162B and 162C concern restrictions on promotion. Clause 234 imposes special restrictions on the marketing of collective investment schemes. As it stands, the prohibition applies to even non-UK branches of the authorised person—even in relation to investors outside the UK. We wish to make the same amendments to the prohibition as we are proposing for financial promotion generally.
In another place the honourable Mrs Melanie Johnson, the Economic Secretary, said in Committee that she was beginning to realise that marketing restrictions applicable to authorised persons under the provisions of Clause 231 do not need to be as wide as those applicable to non-authorised persons under Clause 19. That is why the amendment restricts the prohibition to communications,
"to a person in the United Kingdom".

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This restriction follows the existing law. We tried several times to persuade the Minister that it would damage UK competitiveness if the local regulator allowed the marketing of collective investment schemes to particular categories of investor not allowed by the FSA—typically high net worth individuals—nd the only firms which could not market such schemes to them were authorised persons.
The prohibition applies to all authorised persons, not only UK firms. Why should non-UK firms that establish a branch in the United Kingdom, perhaps using an EC passport, have to be subject to a worldwide prohibition on marketing investment funds to prohibited categories of investor from that UK branch? In addition, if the collective investment scheme that they want to market is established in the UK—typically an English limited partnership—the non-UK firm cannot market it from any branch anywhere in the world, which is perhaps going a bit over the top. The imposition of the world-wide prohibition is likely to induce United Kingdom, or non-UK, authorised persons to use an offshore group company—for example, a special purpose subsidiary—o market the collective investment scheme to prohibited categories of investors outside the United Kingdom. It does not do anyone any good to force them to take that step and perhaps incur substantial expense.
Amendment No. 1620 seeks to make a similar amendment to the special restrictions on promoting collective investment schemes as the amendment proposed to the general prohibition on "financial promotion" marketing in Clause 19. I beg to move.
11.15 p.m.
Lord McIntosh of Haringey: My Lords, we discussed a similar issue in relation to Clause 19. This is another area where, as I indicated then, the differences between the Government and the noble Lord, Lord Kingsland, may be narrowing.
Amendment No. 162B to Clause 234(1) seeks to delete "inducement" and replace it with,
"(a) an invitation to participate in a collective investment scheme; or (b) information which is intended or might reasonably be presumed to be intended to induce any person to do so".
I understand the importance which the Opposition attach to this amendment. But there is not a great deal of difference between us in terms of policy. In Committee I undertook to look at whether Clause 234(1) needed further clarification in respect of the meaning of "inducement". As the Government said repeatedly in relation to this clause and the corresponding words of Clause 19, only promotional communications will be targeted by the prohibition. I believe that is also the intention of the Opposition's amendment.
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As things stand, in my view, Clause 234 as drafted is the best way of tackling these issues. The term "inducement" should, we believe, only catch communications of a promotional nature. The noble Lord, Lord Kingsland, kindly agreed to meet me this Thursday to discuss the matter in the context of Clause 19. I should like to reserve any further judgment on his amendment until we have had the opportunity to have that meeting. I hope that on that basis he will feel able to withdraw it.
Amendment No. 162C seeks to amend subsection (3) of Clause 234 so that subsection (10), which sets out the basic prohibition, does not apply unless the communication is intended or might reasonably be presumed to be intended to be acted on by a person in the United Kingdom. That too was a Committee stage amendment. But there is concern that the clause is not sufficiently clear; that the communication will only be caught if it is targeted or "directed at" a person in the UK. We have said that we believe the issue is one best dealt with in subordinate legislation and have proposed something designed to achieve that in the draft order set out in the second consultation document; namely, cutting back the "capable of having effect" test in subsection (3).
The amendment proposed by the noble Lord, Lord Kingsland, indicates why the Government's approach is prudent. It is not at all clear what "acted on" means. For example, if a communication is sent from abroad for onward transmission by an agent in the United Kingdom, is that a communication which is intended to be "acted on" by a person in the United Kingdom?
Another intention behind the amendment may be the need to address our Community obligations. Let me say categorically that the UK takes its Community obligations seriously in respect both of our treaty obligations in general and any specific legislation such as the proposed e-commerce directive, in particular with regard to the territorial jurisdiction and other requirements it might place on the UK's rules. We are committed to ensuring that these rules comply with all Community requirements. Clause 234 was amended in Committee to clarify that the Treasury can adjust the scope of the Bill's financial promotion regime in order to take full account of international and technological developments. Given our intention to modify the scope of prohibition using secondary legislation, the Government will continue to resist this amendment. I hope that noble Lords will not press it.
Lord Kingsland: My Lords, the Minister reminded me of our meeting on Thursday at 3.30 p.m. That seems a long way away at 11.20 p.m. when we have got through only half of the amendments on the third day of Report stage. Nevertheless, it has sufficient allure for me to thank the Minister for his response and the prospect of discussing all these matters again in 48 hours. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.162C not moved.]
Clause 248 [Procedure when refusing approval of change of manager or trustee]:
Lord Kingslandmoved Amendment No. 162D:
Page 130, line 9, leave out from ("notice") to end of line 10 and insert—

("(a) to the manager if notice of the proposal was given under section 247(1) and, unless the Authority considers that there are good reasons not to do so, to the trustee; and

(b) to the trustee if the notice of the proposal was given under section 247(3) and, unless the Authority considers that there are good reasons not to do so, to the manager.").

The noble Lord said: My Lords, this amendment relates to an issue that we also discussed in Committee concerning Clause 248. As your Lordships are doubtless well aware, that clause deals with the procedure to be adopted by the authority when refusing approval of a change of manager or trustee or an alteration to an authorised unit trust scheme. Under Clause 248(1) notice of the refusal is only to be given to a person who gave notice of the proposal. In turn, that notice will be given by the trustee or the manager of the unit trust.
However, both are likely to be involved in the outcome. Our amendment in Committee was to the effect that notice of refusal should be given both to the trustee and the manager. That did not find favour on the basis that there may be confidential information in the notice which should be restricted to one party.
We accept that there should be a confidentiality override. Our amendment would oblige the authority to give the notice of refusal to both parties unless, in the case of the person who did not give notice of the proposal, the FSA considers that there are good reasons for not giving the notice of refusal to that person. In Committee the Minister said that if, as proposed, the notice went only to the applicant, the authority could, under Clause 257(4) pass on to the other party,
"such information about the revocation or variation, in such a way, as it considers appropriate".—[Official Report, 27/3/00, col.629.]
However, as is clear, Clause 257(4) deals with revocation or variation and does not address the circumstances set out in Clause 248(1). There is no provision elsewhere for passing on information in the event of the refusal of a request to replace the manager or trustee.
As regards Amendment No. 264A, the introduction of the supervisory notice procedure for certain types of enforcement action has resulted in the removal of these cases of the 28-day minimum period for representations. Without fettering the authority's discretion, we believe that it is important to introduce a test of reasonableness in Clause 255(4)(d) for making representations. The authority would still be able to specify a period which allowed for no representations before the event in the case of an urgent decision, but would require a reasonable period for representations
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after the decision had been taken. It would also establish a discipline requiring a reasonable period to be specified in non-urgent cases. I beg to move.
Lord McIntosh of Haringey: My Lords, it is no disrespect to the amendment to remind the House of the very specialist nature of the clauses that it is proposed to amend. We are talking about a requirement on the authority to give a warning notice under Clause 248 when it has been notified of a proposed change in the identity of either the trustee or the manager.
In Clause 247, the Bill requires the manager to notify a proposal to replace the trustee and the trustee to notify a proposal to replace the manager. The amendment says that the authority has to give a warning notice to both. As the Bill stands, if the authority proposes to refuse to approve such a replacement—and only in those circumstances—it must simply give a warning notice to the party that notified it of the proposal.
The amendment would simply put an extra administrative burden on the FSA and would complicate the procedures. It is not just that extra notices would be required; the issue of a decision notice to persons who have received a warning notice also triggers the right for the party that has been given the notice to refer the matter to the tribunal. It would be quite inappropriate for both parties to have rights of referral to the tribunal when the refusal would generally be counter only to the interests of the party proposing the change, who would not of course be the one whose replacement was being refused.
It is also important that the person who has to present the case, both to the authority and to the tribunal if necessary, is the person who will retain a continuing responsibility for the scheme. He will be the party with the interest in the proposed replacement of the other party and must make the case for it. It may be that the person who is to be replaced wishes to give up his role in relation to the scheme. In such a case, if he were aggrieved by a refusal from the authority effectively to release him from his obligations, he could seek judicial review of the authority's conduct in an appropriate case.
Of course we appreciate that a change in the manager or trustee of a scheme has a significant impact on the regulation of the scheme. It may well be that the authority chooses to discuss the matter with the party who it is proposed to replace. However, that should not be an obligation as suggested in this amendment.
Amendment No. 164A would require the authority to specify a "reasonable" period within which a person to whom it has issued a notice of its proposal to issue a direction under Clause 253 may make representations to the authority. The amendment is unnecessary as the authority, being a public body, is bound in any event to act reasonably. Persons to whom notices are issued would have recourse to the normal legal remedy of judicial review were it not to allow a reasonable period for representations. The amendment would add nothing to that. Moreover, it

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would contrast with similar provisions in other clauses of the Bill; for example, in the second new procedure clause recently inserted after Clause 51. It would also be unhelpful to cast doubt on the authority's duty to act reasonably in these cases by explicitly specifying such a requirement in Clause 255. I hope that noble Lords will not pursue these amendments.
Lord Kingsland: My Lords, I am most grateful to the Minister for his reply. I have heard many reasons for not inserting the word "reasonable" in an Act of Parliament but never that one. So, yet again, the noble Lord has made legislative history.
Lord McIntosh of Haringey: My Lords, it was exactly the same sort of argument.
Lord Kingsland: My Lords, as I said, the Minister has made legislative history yet again. Indeed, the noble Lord has confirmed what I just said.
I make no apology for the fact that these amendments concern very specific matters in the Bill. But, of course, the Bill is about individuals conducting their economic life on a daily basis. These details matter enormously to the success of their enterprise. In my submission, it is perfectly proper for the Opposition to deal with detailed matters by way of amendments where that is appropriate. However, I might have misunderstood what the Minister said.
Lord McIntosh of Haringey: My Lords, I deeply apologise if there was any suggestion in my response that it was inappropriate or improper for the Opposition to raise these matters. I had no intention of giving that impression. I was simply pointing out the very specialist nature of the clauses which it is proposed to amend.
Lord Kingsland: My Lords, I am much obliged to the Minister for his response. Perhaps I read too much into his opening remarks. I thought he was suggesting that the amendment was unnecessary or, perhaps, rather tiresome. However, he clearly took neither view and I am most grateful to him for his clear explanation.
I very much regret that the amendments seem to have had no impact whatever on the Minister. However, he will be relieved to hear that instead of pressing them now I shall read what he has said and consider whether they ought to be brought back at Third Reading. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
11.30 p.m.
Clause 253 [Directions]:
Lord McIntosh of Haringeymoved Amendments Nos. 163 and 164:
Page 132, line 6, leave out from ("scheme") to end of line 8.
Page 132, line 9, leave out from ("up") to end of line 11.
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The noble Lord said: My Lords, these amendments have already been spoken to with Amendment No. 107. I beg to move Amendments Nos. 163 and 164 en bloc.
On Question, amendments agreed to.
Clause 255 [Procedure on giving directions under section 253 and varying them on Authority's own initiative]:
[Amendment No. 164A not moved.]
Lord McIntosh of Haringeymoved Amendments Nos. 165 and 166:
Page 133, line 29, at end insert—
("( ) If the direction imposes a requirement under section 253(2)(a), the notice must state that the requirement has effect until—

(a) a specified date; or

(b) a further direction.

( ) If the direction imposes a requirement under section 253(2)(b), the scheme must be wound up—

(a) by a date specified in the notice; or

(b) if no date is specified, as soon as practicable.").

Page 134, line 7, at end insert—
("(12) For the purposes of subsection (1)(c), whether a matter is open to review is to be determined in accordance with section 386(6A).").
The noble Lord said: My Lords, these amendments were debated with Amendment No. 107. I beg to move Amendments Nos. 165 and 166 en bloc.
On Question, amendments agreed to.
Clause 263 [Power of Authority to suspend promotion of scheme]:
Lord McIntosh of Haringeymoved Amendment No. 167:
Page 137, line 29, leave out ("of a kind mentioned in section 234(1)").
The noble Lord said: My Lords, this amendment was debated with Amendment No. 48. I beg to move.
On Question, amendment agreed to.
Clause 264 [Procedure on giving directions under section 263 and varying them on Authority's own initiative]:
Lord McIntosh of Haringeymoved Amendment No. 168:
Page 139, line 28, at end insert—
("(14) For the purposes of subsection (1)(c), whether a matter is open to review is to be determined in accordance with section 386(6A).").
The noble Lord said: My Lords, this amendment was debated with Amendment No. 107. I beg to move.
On Question, amendment agreed to.
Clause 265 [Procedure on application for variation or revocation of direction]:
Lord McIntosh of Haringeymoved Amendment No. 169:
Page 139, line 39, at end insert—
("( ) If the application is refused, the operator of the scheme may refer the matter to the Tribunal.").

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The noble Lord said: My Lords, this amendment was debated with Amendment No. 107. I beg to move.
On Question, amendment agreed to.
Clause 278 [Procedure on giving directions under section 277 and varying them otherwise than as requested]:
Lord McIntosh of Haringeymoved Amendment No. 170:
Page 146, line 23, at end insert—
("(12) For the purposes of subsection (1)(c), whether a matter is open to review is to be determined in accordance with section 386(6A).").
The noble Lord said: My Lords, this amendment was debated with Amendment No. 107. I beg to move.
On Question, amendment agreed to.
Clause 280 [Power to investigate]:
Lord McIntosh of Haringeymoved Amendment No. 170A:
Page 146, line 40, leave out ("The Authority or the Secretary of State") and insert ("An investigating authority").
The noble Lord said: My Lords, in moving Amendment No. 170A I wish to speak also to Amendments Nos. 170AA, AB, AC, AD, AE, AF, AG, AH AJ, AK and AL. This group of amendments has come about in part as a result of concerns raised in Committee about the need to align the circumstances in which an investigator appointed under this clause may obtain information subject to banking confidentiality with those set out in Clause 171 for investigations under Part XI.
Amendment No. 170AK amends Clause 280 so that it accords precisely with the circumstances set out in Clause 171 by inserting the provision for banking confidentiality to be lifted when the investigating authority directs, or when the person to whom confidentiality is owed permits. We have also, as I indicated to your Lordships that we would, tabled amendments to introduce further aspects of the Part XI investigations provisions which are appropriate for investigations concerning collective investment schemes. These amendments ensure that the provisions in the Bill are not any less effective than those in the 1986 Act.
Overall, this group streamlines the drafting, and reduces the potential for ambiguity or uncertainty arising from differences in terminology. I have taken the opportunity to supply noble Lords with a copy of Clause 280, as amended by these amendments.
Amendments Nos. 170A, AB, AC, AE and AF are all drafting amendments adjusting the wording of Clause 280 to reflect the use of the term "investigating authority" in Part XI as a result of the amendments we have discussed to that part.
Amendment No. 170AL ensures that the term "investigating authority" has the same meaning as it has under Part XI, that is, either the FSA or the Secretary of State. Amendment No. 170AG is a further consequential drafting change.
Amendment No. 170AD deletes subsection (4) to Clause 280 which allows the administering of oaths to those under investigation. This is unnecessary, and
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potentially confusing, as Clause 173, which applies to investigations under this clause by virtue of subsection (7), already allows the courts to deal with a person who does not comply with the requirements of the investigations regime as if he were in contempt. Also, Clause 173(4) already makes it an offence to provide false information. Again, this aligns the clause more precisely with Part XI.
Clause 280(7) currently ensures that lawyers may be required to furnish the names of their clients and that liens are not affected by the production of a document. Amendment No. 170AH extends certain other provisions of Clause 171 which are also appropriate to this kind of investigation. These are the powers to take copies or extracts of documents; to require explanations of documents; and to require a person to give an explanation where he fails to produce a document.
Amendment No. 170AJ provides for a power of entry of premises under warrant for collective investment schemes investigations. This is a vital element in ensuring that these powers are effective and it will bring Clause 280 more fully in line with the current position under the Financial Services Act 1986.
Amendment No. 170AA is a drafting amendment which aligns the wording of the Part XVII regime with that of Part XI as regards the persons permitted to conduct investigations.
I hope that noble Lords will appreciate the desirability of these amendments. I beg to move.
Lord Kingsland: My Lords, as I understand them, these amendments bring the power of the authority to appoint investigators in relation to collective investment schemes into line with the provisions relating to investigations generally, and they seem satisfactory. They give the authority and the Secretary of State the power to enter premises under a warrant; to require an authorised person or an employee to explain what is meant by a document disclosed to the investigator; and to tell the investigator where a missing document is.
I have one suggestion, which I offer with great respect, and it concerns new subsection (9) introduced by Amendment No. 170AK. As we have been made aware by the Minister, this amendment provides for the obligation of confidence to be overridden on the instructions of the investigating authority. In my view, this is so serious that I should like to propose to the Minister that the instruction ought to be given by a senior official not personally involved in the meeting with the authorised person concerned.
Lord McIntosh of Haringey: My Lords, I am grateful for the general welcome. I am interested in what the noble Lord said about Amendment No. 170AK. This amendment inserts the provision for banking confidentiality to be lifted when the investigating authority directs or when the person to whom confidentiality is owed permits. I do not think it would be particularly necessary to have a senior

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officer of the investigating authority required to lift confidentiality when the person to whom confidentiality is owed permits, but I shall think about the requirement for a senior officer of the investigating authority to be called in in other circumstances. If I may, I shall write to the noble Lord on that point.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendments Nos. 170AA to 170AL:
Page 146, line 40, leave out ("a person") and insert ("one or more competent persons").
Page 146, line 41, leave out ("and report on") and insert ("on its behalf').
Page 147, line 7, leave out ("Authority or the Secretary of State") and insert ("investigating authority").
Page 147, line 30, leave out subsection (4).
Page 147, line 35, leave out ("the Authority") and insert ("an investigating authority").
Page 147, line 37, leave out paragraph (b).
Page 147, line 39, leave out ("cases") and insert ("case").
Page 147, line 43, after ("Subsections") insert ("(2) to").
Page 147, line 44, at end insert—
("( ) Subsections (1) to (9) of section 172 apply in relation to a person appointed under subsection (1) as if—

(a) references to an investigator were references to a person so appointed;

(b) references to an information requirement were references to a requirement imposed under section 171 or under subsection (3) by a person so appointed;

(c) the premises mentioned in subsection (3)(a) were the premises of a person whose affairs are the subject of an investigation under this section or of an appointed representative of such a person.").

Page 147, line 47, after ("unless") insert ("subsection (9) or (10) applies.
(9) This subsection applies if—

(a) the person to whom the obligation of confidence is owed consents to the disclosure or production; or

(b) the imposing on the person concerned of a requirement with respect to information or a document of a kind mentioned in subsection (8) has been specifically authorised by the investigating authority.

(10) This subsection applies if').
Page 148, line 6, at end insert—
("( ) "Investigating authority" means the Authority or the Secretary of State.").
On Question, amendments agreed to.
Clause 281 [Exemption for recognised investment exchanges and clearing houses]:
Lord McIntosh of Haringeymoved Amendment No. 170AM:
Page 148, line 17, leave out ("and its recognised nominee (if any) are") and insert ("is").
The noble Lord said: My Lords, I am afraid this is an even worse list. In moving Amendment No. 170AM I shall speak also to Amendments Nos. 170AN, 170AP, 170AQ, 170AR, 170AT, 170AU, 170AV, 17OAW, 170AX, 170BA, 170BB, 170BC, 170BF, 170BG, 170BH, 170BJ, 170BK, 170BL and 170U. I think that is the list.
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These amendments remove the provisions concerning recognised nominees from the Bill. The effect of these provisions would have been to allow a recognised body to apply for exempt status to be given to bodies carrying out certain functions on its behalf.
We introduced this concept into the Bill in another place in order to facilitate the application for recognised status by two or more bodies which together formed an exchange or clearing house but which singly did not do so and might, therefore, have had difficulty in applying for recognition.
The particular case which prompted us was that of ISMA (the International Securities Market Association), which sets the rules for the Eurobond market, and ISMA Limited, a subsidiary which carries out functions on ISMA's behalf. However, following the introduction of the recognised nominee provisions we have reviewed the regime closely with the FSA and have had discussions with the recognised bodies and with ISMA. We have identified a flaw in the way the provisions work which has convinced us that it would not be safe to proceed with them.
Recognised bodies will be subject, as now, to recognition requirements concerning their fitness and properness, financial resources and so on. Where they breach these requirements, the FSA can take action. Under the Bill, this will include a power to direct the recognised body to comply with the requirements as well as, in extremis, to revoke the body's recognition.
The flaw in the recognised nominee arrangements is that it may not be possible for the FSA to take action against a recognised nominee, or indeed a recognised body, where the recognised nominee does something which would have been a breach of the recognition requirements if the recognised body had done the same thing itself—that is, the recognised nominee would not be "standing in the shoes" of the recognised body. This potential problem arises because the recognition requirements do not bite directly on the recognised nominee. This creates a serious shortcoming in the supervision of recognised bodies.
Having looked at the options available to us, we have concluded that the best alternative is to remove the recognised nominee arrangements from the Bill. As far as ISMA is concerned, we intend to address the matter in the regulated activities order. Our intention is broadly to replicate the existing arrangements in the Financial Services Act 1986 under which ISMA is recognised as an international securities self-regulating organisation. I beg to move.
Lord Kingsland: My Lords, as the Minister said, the idea of recognised nominees was conceived in the course of the passage of the Bill through another place and was so inserted. Here we are, several stages on in your Lordships' House and now the Minister has informed us, doubtless for very good reasons, that the concept of recognised nominees is being expunged. The Minister is a well-known expert on English literature. He will recall the name of the author, because I cannot, who claimed to have spent the whole of the morning inserting a comma in his text and the

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whole of the afternoon deciding on whether or not to take it out. Was it Henry James? I cannot believe that, for once, I have stumped the noble Lord.
Lord McIntosh of Haringey: My Lords, the noble Lord teases me. I am embarrassed. I commend the amendment to the House.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendments Nos. 170AN to 170AR:
Page 148. line 22, leave out ("or by its recognised nominee on its behalf—).
Page 148, line 24, leave out ("and its recognised nominee (if any) are") and insert ("is").
Page 148, line 27, leave out ("or by its recognised nominee on its behalf").
Page 148, line 29, leave out subsection (4).
On Question, amendments agreed to.
Clause 282 [Qualification for recognition]:
Lord Saatchimoved Amendment No. 170AS:
Page 149, line 11, at end insert
("(6) Regulations made under subsection (1) must provide as recognition requirements—

(a) a requirement that the investment exchange or clearing house must establish and maintain arrangements for the investigation by a person independent of the investment exchange or clearing house of complaints arising in connection with the activities of the investment exchange or clearing house;

(b) a requirement that the arrangements established by the investment exchange or clearing house for the taking of disciplinary measures in relation to its members comply with the requirements of the European Convention on Human Rights; and

(c) a requirement that the investment exchange or clearing house is subject to restrictions on the disclosure of confidential information obtained from other persons equivalent to the restrictions which apply to the Authority under this Act.").

The noble Lord said: My Lords, Amendment No. 170AS concerns Clause 282 and the Treasury's regulations setting out the requirements which must be satisfied by an investment exchange or .a clearing house if it is to qualify as a body in respect of which the FSA may make a recognition order and which, if a recognition order is made, it must continue to satisfy if it is to remain a recognised body.
Such recognised bodies are regulated entities, and regulators themselves in that they regulate the conduct of their members and take disciplinary action against them. To some extent, the role of these quasi-regulators has escaped detailed scrutiny during the passage of the Bill. The purpose of Amendment No. 170AS is to raise a number of issues concerning the criteria which the Treasury will lay down as recognition requirements under Clause 282.
The amendment proposes as recognition requirements matters which already apply to the FSA; notably, an independent complaints investigator, disciplinary measures in relation to members of the recognised body which comply with the requirements of the ECHR, and an obligation not to disclose confidential information obtained from third parties.
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I hope the Minister will be able to confirm that these requirements represent the bare minimum that the Treasury will be setting out in the regulations under Clause 282.
Perhaps the Minister would also confirm that these are indeed the recognition arrangements that will apply to the merged LondonFrankfurt recognised exchange.
11.45 p.m.
Lord McIntosh of Haringey: My Lords, when we discussed the Bill's provisions dealing with recognised bodies in Committee, I made it clear that we should deal with the requirements on internal arrangements and the operation of recognised investment exchanges and recognised clearing houses in the recognition requirements that the Treasury will make under the powers of Clause 282(1)—in other words, not on the face of the Bill. We consulted on a draft of these requirements in February last year. So, although I agree with much of the substance of the amendment, I do not think it would be appropriate to place such a provision on the face of the Bill.
The noble Lord, Lord Saatchi, seeks to place on the face of the Bill details of how recognised bodies should operate. The problem with that, and the reason that we decided to do it by secondary legislation in the first place, is that we should not be able to update the requirements as necessary to take account of developments in the industry. We should run the risk of either over-loading the face of the Bill with detail or of missing some important points.
The amendment would do three things. First, paragraph (a) would require each recognised body to appoint an independent complaints investigator. One of the recommendations of the Burns committee was that the recognised body should be required, as a condition of having statutory immunity, to have "an adequate complaints procedure in place". The Government have accepted that recommendation. They have given a commitment that the recognition requirements will provide that all recognised bodies must have independent and fair arrangements for dealing with complaints. I am happy to repeat that commitment. I do not believe the amendment to be necessary.
Paragraph (c) of the amendment provides that recognised bodies must maintain restrictions on the disclosure of confidential information "equivalent" to those imposed on the FSA. I share concern that the recognised bodies should not be able to disclose information that they have received in confidence unless there is a good reason for doing so. They will, of course, be subject to the common law duties of confidentiality as they are now, so they will not be able to disclose confidential information unless the public interest in disclosing it outweighs the public interest in maintaining confidence.
If anything further is required—and I do not think it is—that can be addressed when we come to make the recognition requirements. If anything needs to be done, it should not be done by applying arrangements

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that are the equivalent, or the same as, those applying to the FSA. The FSA is a different animal from the recognised bodies, having different functions under the Bill.
Paragraph (b) of the amendment would require recognition requirements to be made under which recognised bodies would have to comply with the requirements of the European Convention on Human Rights. In one sense, that is simply unnecessary. The Bill is drafted on the assumption that the recognised bodies will be public authorities for the purpose of the Human Rights Act 1998. But in so far as it is necessary to make provisions to take account of that in the recognition requirements, we should of course do so.
The noble Lord asked whether these criteria would apply to the merged exchange. As I said earlier, that is the expectation, although the exact form of the merged body, and hence the regulatory arrangements, are not yet clear.
Even in the absence of the noble and learned Lord, Lord Donaldson, for the record I should like to refer to a matter that he raised and argued in Committee; namely, that, in order to ensure consistency between the disciplinary arrangements of recognised bodies and the market abuse regime under the Bill, it would be helpful if the tribunal to be established under the Bill were to have a role in relation to the disciplinary decisions of recognised bodies. I said at the time that I was not attracted to the idea, but since then I have talked to the noble and learned Lord and corresponded with him. We have concluded that, given the overlap between the market abuse regime and some of the rules of recognised bodies, there is merit in ensuring that it would be possible for the tribunal to be given a role in such disciplinary cases if that were considered desirable in the future.
We have decided to table amendments to deal with this matter at Third Reading. We intend that the power should take the form of allowing the Treasury to extend the jurisdiction of the tribunal to cover specified types of hearing before the disciplinary proceedings of recognised bodies. Before such power is implemented we shall consult the exchanges and the clearing houses. I am sorry to add that point to my response, but I want to put it on the record for the benefit of the noble and learned Lord, Lord Donaldson. As to the amendment that we are now debating, I hope that I have persuaded the noble Lord not to press it.
Lord Saatchi: My Lords, I thought I heard the Minister say that in the context of the merged London and Frankfurt exchanges, the regulatory arrangements were not yet clear.
Lord McIntosh of Haringey: My Lords, that was not quite what I said. I said that the exact form of the merged body was not clear which meant that the appropriate regulatory arrangements for that merged
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body were not clear. That does not mean that there is any doubt about the availability of suitable regulatory arrangements.
Lord Saatchi: My Lords, does the Minister accept that the statement that the regulatory arrangements are not yet clear is slightly at odds with his view expressed earlier today that the regulatory arrangements are as contained in this Bill? If they are not yet clear, how can he be certain that the arrangements are as described in this Bill?
Lord McIntosh of Haringey: My Lords, I do not want to leave the House with the wrong impression. This Bill provides for suitable regulatory arrangements for any possible final constitution of the merged body.
Lord Saatchi: My Lords, I shall not press the point further. I am sure that the Minister understands what I am getting at. I should like to study the Minister's response in Hansard—I was distracted by the interest generated in the statement of the noble Lord—before deciding what to do at Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 283 [Application by an investment exchange]:
Lord McIntosh of Haringeymoved Amendments Nos. 170AT to 170AX:
Page 149, line 16, leave out subsection (2).
Page 149, line 23, leave out paragraph (d).
Clause 284 [Application by a clearing house]:
Page 149, line 39, leave out subsection (2).
Page 150, line 3, leave out paragraph (d).
Clause 286 [Recognition orders]:
Page 150, line 31, leave out subsections (2) and (3).
The noble Lord said: My Lords, I beg to move Amendments Nos. 170AT to 170AX en bloc.
The Deputy Speaker (Lord Skelmersdale): My Lords, I am in the hands of the House but it is a bit naughty.
On Question, amendments agreed to.
Lord McIntosh of Haringeymoved Amendment No. 170AY:
Page 150, line 39, leave out ("299") and insert ("(Recognition orders: role of the Treasury)").
The noble Lord said: My Lords, it is perfectly proper at Report stage to move en bloc amendments which cover more than one clause.
In moving Amendment No. 170AY, I should like to speak also to Amendments Nos. 170B, 170BD, 170BE, 170BM, 170BT, 170BX to 170CG, 170D to 170L and 170V. It takes half an hour to turn over the pages of the amendments. It reminds me of the time that I began to read Proust's A la recherche du temps perdu in French. I say this for the benefit of the noble Lord, Lord Kingsland. It took me two hours to cut the pages, which was as long as I would normally have spent reading an entire book.

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This group of amendments brings the competition scrutiny arrangement for recognised bodies into line with those which have been put in place for the FSA in Chapter III of Part X. We indicated on a number of occasions that we would table amendments to this end. We have already debated these arrangements as far as concerns the FSA. The key changes which the arrangements make are to give the Competition Commission an important role in scrutiny arrangements and to restrict the role of the Treasury in second-guessing the competition authorities compared with the position now. I hope that, provided noble Lords are satisfied with such details as they wish to have, they agree that the objective of the amendments is wholly admirable.
We believe that these are important changes. Like the FSA, it is possible that recognised bodies which have regulatory functions in relation to the markets that they run and the clearing services that they provide can do things which have an adverse impact on competition. Although there may be good reasons to justify this in a particular case, it is important that these bodies are subject to a robust, thorough and effective external scrutiny in this respect. Ensuring that action can be taken where competition is damaged unnecessarily is vital to getting the regulatory balance right. This was recognised in the Financial Services Act 1986, which put in place a similar competition scrutiny regime for recognised bodies. It is, if anything, even more important now in the age of globalisation.
I should draw attention to two main differences of substance between the arrangements put in place for recognised bodies in Part XVIII and those which we have debated in respect of the FSA in Part X. These are, first, that the regime has to cover applicants for recognition, as well as bodies which are already recognised. This adds not inconsiderably to the complexity of these clauses, compared with those in Part X.
The second difference is that the recognised bodies themselves can exploit the strength of their market position. This is because, in spite of having some regulatory responsibilities, they arc also commercial bodies. The FSA is not in the same position and it is therefore necessary for the competition scrutiny regime to be able to consider whether an exchange or clearing house is exploiting its strong market position, for example, to keep potential new entrants at bay. Apart from these differences, the regime put in place is the same as that which we have agreed should apply to the FSA. I hope that I may commend these amendments to the House. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendment No. 170B:
Page 151, line 3, leave out ("299") and insert ("(Recognition orders: role of the Treasury)").
The noble Lord said: My Lords, I beg to move this amendment.
On Question, amendment agreed to.
Clause 287 [Liability in relation to recognised body regulatory functions]:
Lord McIntosh of Haringeymoved Amendment No. 170BA:
Page 151, line 4, leave out from ("body") to ("are") in line 5 and insert ("and its officers and staff").
The noble Lord said: My Lords, I beg to move this amendment, already spoken to.
On Question, amendment agreed to.
Clause 289 [Notification requirements]:
Lord McIntosh of Haringeymoved Amendments Nos. 170BB, 170BC, 170BD and 170BE:
Page 152, line 11, leave out ("or its recognised nominee (if any)").
Page 152, line 16, leave out ("or its recognised nominee (if any)").
Page 152, line 40, leave out subsection (8).
Page 152, line 43, leave out ("(8)") and insert ("(7)").
The noble Lord said: My Lords, I beg to move these amendments en bloc. They have been spoken to.
On Question, amendments agreed to.
Clause 292 [Authority's power to give directions]:
Lord McIntosh of Haringeymoved Amendment No. 170BF:
Page 153, line 38, leave out ("or its recognised nominee (if any)").
The noble Lord said: My Lords, I beg to move this amendment, which has already been spoken to.
On Question, amendment agreed to.
Clause 293 [Variation of recognition order in relation to recognised nominee]:
Lord McIntosh of Haringeymoved Amendment No. 170BG:
Leave out Clause 293.
The noble Lord said: My Lords, I beg to move this amendment, which has already been spoken to.
On Question, amendment agreed to.
Clause 295 [Directions and revocation: procedure]:
Lord McIntosh of Haringeymoved Amendments Nos. 170BH, 170BJ, 170BK, 170BL and 170BM:
Page 155, line 8, leave out ("or (4)(b)").
Page 155, line 15, leave out subsection (4).
Page 155, line 31, leave out ("or (4)(b)").
Page 155, line 40, leave out subsection (8).
Page 156, line 7, leave out subsection (11).
The noble Lord said: My Lords, I beg to move these amendments en bloc. They have already been spoken to.
On Question, amendments agreed to.
Clause 298 [Interpretation]:
Lord McIntosh of Haringeymoved Amendment No. 170BN:
Page 157, line 23, at end insert—
(""practices" means—

(a) in relation to a recognised investment exchange, the practices of the exchange in its capacity as such; and

(b) in relation to a recognised clearing house, the practices of the clearing house in respect of its clearing arrangements;").

The noble Lord said: My Lords, in moving Amendment No. 170BN, I should like to speak also to Amendments Nos. 170BP, 170BQ, 170BR, 170BS, 170BU, 170BV, 170BW, 170N, 170P, 170R and 170S. These amendments are a further part of the changes that we have said that we should make to bring the competition scrutiny regime in Part XVIII into line with that of Part X. They concern the description of what is covered by the regime. As in the case of the FSA, the director general will keep under review the rules, guidance and practices of recognised bodies.
Amendments Nos. 170BN, 170BP and 170BQ define what the practices of recognised bodies are for that purpose and make a drafting correction concerning the description of the criteria which recognised bodies laid down when determining to whom they will provide clearing services.
Amendments Nos. 170BR and 170N, 170P and 170R simply remove a number of unnecessary references in this part of the Bill to the trading practices of those subject to the rules of recognised exchanges and clearing houses. That is because the regime is concerned with ensuring that the recognised bodies do not require their members to engage in practices which are unnecessarily anti-competitive. It is not concerned with what those members get up to of their own accord. That is a matter covered by the Competition Act 1998.
Amendment No. 170BS brings the description of what the regime is aimed at—things which have a significantly adverse effect on competition—into line with the wording introduced in Part X in Committee.
Finally, Amendments Nos. 170BU, 170BV and 170BW make a drafting correction to Clause 298, which currently talks about guidance where it should talk about regulatory provisions, which includes rules as well as guidance. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendments Nos. 170BP to 170BW:
Page 157, line 29, leave out ("particulars described") and insert ("criteria mentioned").
Page 157, line 31, leave out ("particulars described") and insert ("criteria mentioned").
Page 157, leave out lines 32 to 41.
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Page 157, line 42, leave out from ("Chapter") to end of line 45 and insert ("regulatory provisions or practices have a significantly adverse effect on competition if—

(a) they have, or are intended or likely to have, that effect; or

(b) the effect that they have, or are intended or likely to have, is to require or encourage behaviour which has, or is intended or likely to have, a significantly adverse effect on competition.

( ) If regulatory provisions or practices have or are intended or likely to have, the effect of requiring or encouraging exploitation of the strength of a market position they are to be taken, for the purposes of this Chapter, to have an adverse effect on competition.").
Page 158, line 1, leave out subsection (3).
Page 158, line 8, leave out ("guidance has, or is") and insert ("regulatory provisions have, or are intended or").
Page 158, line 9, leave out ("it is") and insert ("the provisions concerned are").
Page 158, line 10, leave out ("it") and insert ("them").
On Question, amendments agreed to.
Clause 299 [Examination of rules and guidance]:
Lord McIntosh of Haringeymoved Amendment No. 170BX:
Leave out Clause 299.
On Question, amendment agreed to.
Clause 300 [Continuing scrutiny]:
Lord McIntosh of Haringeymoved Amendment No. 170BY:
Leave out Clause 300.
On Question, amendment agreed to.
Clause 301 [Initial report by Director General of Fair Trading]:
Lord McIntosh of Haringeymoved Amendments Nos. 170C to 170CC:
Page 159, line 13, leave out from ("284") to ("in") in line 14 and insert—
("( ) The Authority must send to the Director such information in its possession as a result of the application for recognition as it considers will assist him in discharging his functions").
Page 159, line 16, leave out from ("must") to end of line 24 and insert ("issue a report as to whether—

(a) a regulatory provision of which a copy has been sent to him under subsection (1) has a significantly adverse effect on competition, or

(b) a combination of regulatory provisions so copied to him have such an effect.").

Page 159, leave out lines 26 to 34 and insert ("significantly adverse effect on competition,").
Page 159, line 35, at end insert—
("( ) When the Director issues a report under subsection (2), he must send a copy of it to the Authority, the Competition Commission and the Treasury.").
On Question, amendments agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 170CD:
After Clause 301, insert the following new clause—
FURTHER REPORTS BY DIRECTOR GENERAL OF FAIR TRADING
(".—(1) The Director must keep under review the regulatory provisions and practices of recognised bodies.

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(2) If at any time the Director considers that—

(a) a regulatory provision or practice has a significantly adverse effect on competition, or

(b) regulatory provisions or practices, or a combination of regulating provisions and practices have such an effect,

he must make a report.
(3) If at any time the Director considers that—

(a) a regulatory provision or practice does not have a significantly adverse effect on competition, or

(b) regulatory provisions or practices, or a combination of regulatory provisions and practices do not have any such effect,

he may make a report to that effect.
(4) A report under subsection (2) must contain details of the adverse effect on competition.
(5) If the Director makes a report under subsection (2), he must—

(a) send a copy of it to the Treasury, to the Competition Commission and to the Authority; and

(b) publish it in the way appearing to him to be best calculated to bring it to the attention of the public.

(6) If the Director makes a report under subsection (3)—

(a) he must send a copy of it to the Treasury, to the Competition Commission and to the Authority; and

(b) he may publish it.

(7) Before publishing a report under this section, the Director must, so far as practicable exclude any matter which relates to the private affairs of a particular individual the publication of which, in the opinion of the Director, would or might seriously and prejudicially affect his interests.
(8) Before publishing such a report, the Director must exclude any matter which relates to the affairs of a particular body the publication of which, in the opinion of the Director, would or might seriously and prejudicially affect its interests.
(9) Subsections (7) and (8) do not apply to the copy of a report which the Director is required to send to the Treasury, the Competition Commission and the Authority under subsection (5)(a) or (6)(a).
(10) For the purposes of the law of defamation, absolute privilege attaches to any report of the Director under this section.").
On Question, amendment agreed to.
Clause 302 [Further reports by Director General of Fair Trading]:
Lord McIntosh of Haringeymoved Amendment No. 170CE:
Leave out Clause 302.
On Question, amendment agreed to.
Clause 303 [Reports: supplementary]:
Lord McIntosh of Haringeymoved Amendment No. 170CF:
Leave out Clause 303.
On Question, amendment agreed to.
Clause 304 [Investigations by Director General of Fair Trading]:
Lord McIntosh of Haringeymoved Amendments Nos. 170CG to 170CK:
Page 160, line 40, leave out ("302") and insert ("(Further reports by Director General of Fair Trading)").
Page 161, line 3, leave out from ("control") to end of line 4.
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Page 161, line 10, at end insert—
("( ) A requirement may be imposed under subsection (2) or (3)(a) only in respect of documents or information which relate to any matter relevant to the investigation.").
Page 161, line 20, leave out from ("Court;") to ("Scotland") in line 21 and insert ("or (b) in").
On Question, amendments agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 170D to 170G:
After Clause 304, insert the following new clause—
("Role of the Competition Commission
CONSIDERATION BY COMPETITION COMMISSION
.—(1) If subsection (2) or (3) applies, the Commission must investigate the matter which is the subject of the Director's report.
(2) This subsection applies if the Director sends to the Competition Commission a report —

(a) issued by him under section 301(2) which concludes that one or more regulatory provisions have a significantly adverse effect on competition, or

(b) made by him under section (Further reports by Director General of Fair Trading)(2).

(3) This subsection applies if the Director asks the Commission to consider a report—

(a) issued by him under section 301(2) which concludes that one or more regulatory provisions do not have a significantly adverse effect on competition, or

(b) made by him under section (Further reports by Director General of Fair Trading)(3).

(4) The Commission must then make its own report on the matter unless it considers that, as a result of a change of circumstances, no useful purpose would be served by a report.
(5) If the Commission decides in accordance with subsection (4) not to make a report, it must make a statement setting out the change of circumstances which resulted in that decision.
(6) A report made under this section must state the Commission's conclusion as to whether—

(a) the regulatory provision or practice which is the subject of the report has a significantly adverse effect on competition, or

(b) the regulatory provisions or practices or combination of regulatory provisions and practices which are the subject of the report have such an effect.

(7) A report under this section stating the Commission's conclusion that there is a significantly adverse effect on competition must also—

(a) state whether the Commission considers that that effect is justified; and

(b) if it states that the Commission considers that it is not justified, state its conclusion as to what action if any the Treasury ought to direct the Authority to take.

(8) Subsection (9) applies whenever the Commission is considering, for the purposes of this section, whether a particular adverse effect on competition is justified.
(9) The Commission must ensure, so far as that is reasonably possible, that the conclusion it reaches is compatible with the obligations imposed on the recognised body concerred by or under this Act.
(10) A report under this section must contain such an account of the Commission's reasons for its conclusions as is expedient, in the opinion of the Commission, for facilitating proper understanding of them.

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(11) The provisions of Schedule 14 (except paragraph 2(b)) apply for the purposes of this section as they apply for the purposes of section 158.
(12) If the Commission makes a report under this section it must send a copy to the Treasury, the Authority and the Director.").
After Clause 304, insert the following new clause—
("Role of the Treasury
RECOGNITION ORDERS: ROLE OF THE TREASURY
.—(1) Subsection (2) applies if, on an application for a recognition order—

(a) the Director makes a report under section 301 but does not ask the Competition to consider it under section (Consideration by Competition Commission);

(b) the Competition Commission concludes—

(i) that the applicant's regulatory provisions do not have a significantly adverse effect on competition; or

(ii) that if those provisions do have that effect, the effect is justified.

(2) The Treasury may refuse to approve the making of the recognition order only if they consider that the exceptional circumstances of the case make it inappropriate for them to give their approval.
(3) Subsection (4) applies if, on an application for a recognition order, the Competition Commission concludes—

(a) that the applicant's regulatory provisions have a significantly adverse effect on competition; and

(b) that that effect is not justified.

(4) The Treasury must refuse to approve the making of the recognition order unless they consider that the exceptional circumstances of the case make it inappropriate for them to refuse their approval.").
After Clause 304, insert the following new clause—
DIRECTIONS BY THE TREASURY
(".—(1) This section applies if the Competition Commission makes a report under section (Consideration by Competition Commission)(4) (other than a report on an application for a recognition order) which states the Commission's conclusion that there is a significantly adverse effect on competition.
(2) If the Commission's conclusion, as stated in the report, is that the adverse effect on competition is not justified, the Treasury must give a remedial direction to the Authority.
(3) But subsection (2) does not apply if the Treasury consider—

(a) that, as a result of action taken by the Authority or the recognised body concerned in response to the Commission's report, it is unnecessary for them to give a direction; or

(b) that the exceptional circumstances of the case make it inappropriate or unnecessary for them to do so.

(4) In considering the action to be specified in a remedial direction, the Treasury must have regard to any conclusion of the Commission included in the report because of section (Consideration by Competition Commission)(7)(b).
(5) Subsection (6) applies if—

(a) the Commission's conclusion, as stated in its report, is that the adverse effect on competition is justified; but

(b) the Treasury consider that the exceptional circumstances of the case require them to act.

(6) The Treasury may give a direction to the Authority requiring it to take such action—

(a) as they consider to be necessary in the light of the exceptional circumstances of the case; and

(b) as may be specified in the direction.

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(7) If the action specified in a remedial direction is the giving by the Authority of a direction—

(a) the direction to be given must be compatible with the recognition requirements applicable to the recognised body in relation to which it is given; and

(b) subsections (3) and (4) of section 292 apply to it as if it were a direction given under that section.

(8) "Remedial direction" means a direction requiring the Authority—

(a) to revoke the recognition order for the body concerned; or

(b) to give such directions to the body concerned as may be specified in it.").

After Clause 304, insert the following new clause—
STATEMENTS BY THE TREASURY
(".—(1) If, in reliance on subsection (3)(a) or (b) of section (Directions by the Treasury), the Treasury decline to act under subsection (2) of that section, they must make a statement to that effect, giving their reasons.
(2) If the Treasury give a direction under section (Directions by the Treasury) they must make a statement giving—

(a) details of the direction; and

(b) if the direction is given under subsection (6) of that section, their reasons for giving it.

(3) The Treasury must—

(a) publish any statement made under this section in the way appearing to them best calculated to bring it to the attention of the public; and

(b) lay a copy of it before Parliament.").

On Question, amendments agreed to.
Clause 305 [Procedure on exercise of certain powers by Treasury]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 170H to 170L:
Page 161, line 22, leave out from beginning to ("such") in line 24 and insert—
("(1) Subsection (2) applies if the Treasury are considering—

(a) whether to refuse their approval under section (Recognition orders: role of the Treasury);

(b) whether section (Directions by the Treasury)(2) applies; or

(c) whether to give a direction under section (Directions by the Treasury )(6).

(2) The Treasury must—
(a) take").
Page 161, line 29, leave out ("302;") and insert ("(Further reports by Director General of Fair Trading) or by the Competition Commission under section (Consideration by Competition Commission):").
Page 161, line 31, leave out ("299 or 300:") and insert ("(Recognition orders: role of the Treasury) or (Directions by the Treasury):").
Page 161, line 32, leave out ("had").
On Question, amendments agreed to.
Clause 306 [Monopoly situations etc.]:
Lord McIntosh of Haringeymoved Amendment No. 170M:
Leave out Clause 306.
The noble Lord said: My Lords, in moving Amendment No. 170M I should like to speak also to Amendments Nos. 170Q and 170T.

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These amendments complete the changes needed to align the competition provisions in Part XVIII with those in Chapter III of Part X: we indicated at earlier stages that we would do this. Amendment No. 170M deletes Clause 306 and removes a bar on the Competition Commission looking at a recognised body's regulatory provisions and practices when investigating whether a monopoly situation exists under the Fair Trading Act 1973. We removed a similar bar in the regime in Part X in response to Don Cruickshank's interim report on banking services in the United Kingdom.
Amendments Nos. 170Q and 170T narrow the exclusion from the Competition Act 1998 in the same way as we have in Part X. Again this was in response to the Cruickshank recommendations. I beg to move.
On Question, amendment agreed to.
Clause 307 [The Chapter I prohibition]:
Lord McIntosh of Haringeymoved Amendments Nos. 170N to 170R:
Page 162, line 42, leave out paragraph (b).
Page 163, line 1, leave out paragraph (b).
Page 163, line 7, leave out ("contemplated") and insert ("encouraged").
Page 163, line 8, leave out from first ("practices") to end of line 9.
On Question, amendments agreed to.
Clause 308 [The Chapter II prohibition]:
Lord McIntosh of Haringeymoved Amendments Nos 170S and 170T:
Page 163, line 21, leave out paragraph (b).
Page 163, line 25, leave out ("contemplated") and insert ("encouraged").
On Question, amendments agreed to.
Clause 309 [Interpretation of Part XVIII]:
Lord McIntosh of Haringeymoved Amendments Nos. 170U and 170V:
Page 164, leave out lines 8 and 9.
Page 164, line 12, leave out ("300(3);") and insert ("(Directions by the Treasury)(8);").
On Question, amendments agreed to.
Clause 313 [The core provisions]:
Lord McIntosh of Haringeymoved Amendment No 170W:
Page 166, line 23, leave out ("381") and insert ("380").
The noble Lord said: My Lords, in moving Amendment No. 170W, perhaps I may say that there are two Opposition amendments in the group. If I may, I shall comment on them after they have been spoken to by noble Lords opposite.
Amendment No. 170W is a minor consequential amendment that I hope will not detain us. It removes the reference to Clause 381 from Clause 313(1), which lists the core provisions which may be applied to members of Lloyd's by an insurance market direction
1522
under Clause 312. The reason for the amendment is that Clause 381 has been deleted as part of the package of decision-making amendments. I beg to move.
Lord Kingsland: My Lords, in this group the Opposition have Amendments Nos. 170X and 170Y, to which I can speak briefly. They concern Lloyd's and matters of consultation.
In our view a proposed exercise of powers under Clause 315 to make a direction should be accompanied by an explanation. If the direction needs to be made urgently and therefore without consultation it should still be accompanied by a cost benefit analysis and a statement of reason.
Lord McIntosh of Haringey: My Lords, I am grateful for that terse or, indeed, telegraphic introduction to the two amendments.
Amendment No. 170X would require the authority, when consulting on a direction under Clauses 312, 314 or rules under Clause 318, to specify the purpose of the direction or the rules. This amendment points to one of the few discrepancies between the consultation requirements under Clause 151 that relate to general rules and the other consultation requirements in the Bill.
The Government brought very extensive amendments at the Report stage in another place to align the consultation procedures across the Bill in so far as it was appropriate to align them. Clause 151 includes a requirement for rules to be accompanied by an explanation of their purpose. That requirement does not feature in the other equivalent provisions.
The reason is simple. We believe that the purpose of the proposed rules, codes, directions, policy statements (or however they are described) will be fairly clear and so there is no need for this provision. If it ever turned out that the purpose was unclear, I find it difficult to imagine that the FSA would not add suitable words to clarify the point.
By contrast, I believe that clarity may be lacking quite regularly when the authority exercises its general rule-making powers under Part X of the Bill. It is for that reason that the additional requirement features in Part X but not elsewhere. It is therefore unnecessary and simply destroys the symmetry we have now managed to achieve across the Bill.
Amendment No. 170Y is similar to Amendment No. 157UA which we debated earlier today on the consultation on rules made under Part. X. It seeks to apply certain procedural requirements where powers are exercised in cases of urgency. Specifically, it would require the FSA to publish the information required for consultation—that is, a cost-benefit analysis and an explanation of the purpose of the proposed rule or direction—when giving the direction or making the rule.
The cost-benefit analysis and other material are to help inform the public about the proposed rule as background to the consultation. It seems unnecessarily bureaucratic to ask the FSA to provide supporting material for a consultation process which

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the amendment acknowledges has had to be avoided for legitimate and defensible reasons. I have to say that in cases of genuine urgency, I doubt that it would be possible to prepare a meaningful and robust cost-benefit analysis without inflicting the very delays we are seeking to avoid under this special procedure.
As I said in the case of Amendment No. 157UA, we would not favour imposing a requirement on the FSA to provide supporting material after the event, although clearly anything it is able to do—either formally or informally—will be welcome. It is worth remembering that in the case of Lloyd's the target of such rules or directions will be a much narrower class. Before the rules or directions were given, in most cases, even in cases of urgency, there would have been technical discussions between the society and the FSA during which the scale of burdens imposed and the purpose were adequately discussed.
I also believe it unlikely that the FSA would exercise powers under the urgent procedure in anything but exceptional and therefore rare circumstances. I hope that that will encourage the noble Lord not to press his amendments. I commend Amendment No. 170W to the House.
On Question, amendment agreed to.
Clause 315 [Consultation]:
[Amendments Nos. 170X and 170 Y not moved.]
Clause 317 [Requirements imposed under section 316]:
Lord McIntosh of Haringeymoved Amendments Nos. 171 and 172:
Page 169, line 23, after ("If") insert ("the Authority decides to refuse").
Page 169, line 23, leave out ("is refused").
On Question, amendments agreed to.
Clause 320 [Authority's general duty]:
Lord McIntosh of Haringeymoved Amendment No. 172A:
Page 170, line 18, after ("may") insert (", as a result of this Part,").
On Question, amendment agreed to.
Clause 322 [Exemption from the general prohibition]:
[Amendments Nos. 173 to 174 not moved.]
Lord McIntosh of Haringeymoved Amendment No. 174A:
Page 171, line 44, at end insert ("; or
( ) one in relation to which he is an exempt person.").
On Question, amendment agreed to.
[Amendment No. 175 not moved.]
Lord McIntosh of Haringeymoved Amendment No. 175A:
Page 172, line 4, at end insert ("(other than regulated activities in relation to which he is an exempt person)").
On Question, amendment agreed to.
Clause 327 [Rules in relation to persons to whom the general prohibition does not apply]:
Lord McIntosh of Haringeymoved Amendment No. 175B:
Page 175, line 18, leave out ("of regulated activities by those members") and insert ("by those members of regulated activities (other than regulated activities in relation to which they are exempt persons)").
On Question, amendment agreed to.
[Amendment No. 175C not moved.]
Clause 329 [The Friendly Societies Commission]:
Lord McIntosh of Haringeymoved Amendment No. 176:
Page 176, line 14, at end insert—
("(4) Part IA of Schedule 18—

(a) removes certain restrictions on the ability of incorporated friendly societies to form subsidiaries and control corporate bodies; and

(b) makes connected amendments.").

The noble Lord said: My Lords, in moving Amendment No. 176 I wish to speak also to Amendments Nos. 177, 227 and 228. These amendments will amend the Friendly Societies Act 1992 to confer greater freedoms on incorporated friendly societies to form and own subsidiaries and jointly controlled bodies. The amendments have been brought forward in line with a commitment given by the Economic Secretary to the Treasury at Report stage in another place. The commitment was given in response to an amendment tabled by the Liberal Democrats. I gather that the proposals had all-party support, and I hope that the amendments will be welcomed as warmly by your Lordships as was the policy announcement in another place. I beg to move.
On Question, amendment agreed to.
Schedule 18 [Mutuals]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 177:
Page 277, line 39, at end insert—
("PART IA
FRIENDLY SOCIETIES: SUBSIDIARIES AND CONTROLLED BODIES
Interpretation
In this Part of this Schedule—
"the 1992 Act" means the Friendly Societies Act 1992; and
"section 13" means section 13 of that Act.
Qualifying bodies
.—(1) Subsections (2) to (5) of section 13 (incorporated friendly societies allowed to form or acquire control or joint control only of qualifying bodies) cease to have effect.
(2) As a result, omit—

(a) subsections (8) and (11 ) of that section, and

(b) Schedule 7 to the 1992 Act (activities which may be carried on by a subsidiary of, or body jointly controlled by, an incorporated friendly society).

Bodies controlled by societies
In section 13(9) (defined terms), after paragraph (a) insert—
"(aa) an incorporated friendly society also has control of a body corporate if the body corporate is itself a body controlled in one of the ways mentioned in paragraph (a)(i), (ii) or (iii) by a body corporate of which the society has control;".
Joint control by societies
In section 13(9), after paragraph (c) insert—
"(cc) an incorporated friendly society also has joint control of a body corporate if—

(i) a subsidiary of the society has joint control of the body corporate in a way mentioned in paragraph (c)(i), (ii) or (iii);

(ii) a body corporate of which the society has joint control has joint control of the body corporate in such a way; or

(iii) the body corporate is controlled in a way mentioned in paragraph (a)(i), (ii) or (iii) by a body corporate of which the society has joint control;",

Acquisition of joint control
In section 13(9), in the words following paragraph (d), after "paragraph (c)" insert "or (cc)".
Amendment of Schedule 8 to the 1992 Act
.—(1) Schedule 8 to the 1992 Act (provisions supplementing section 13) is amended as follows.

(2) Omit paragraph 3(2).

(3) After paragraph 3 insert—

"3A.—(1 ) A body is to be treated for the purposes of section 13)9) as having the right to appoint to a directorship if—

(a) a person's appointment to the directorship follows necessarily from his appointment as an officer of that body; or

(b) the directorship is held by the body itself.

(2) A body ("B") and some other person ("P") together are to be treated, for the purposes of section 13(9), as having the right to appoint to a directorship if—

(a) P is a body corporate which has directors and a person's appointment to the directorship follows necessarily from his appointment both as an officer of B and a director of P;

(b) P is a body corporate which does not have directors and a person's appointment to the directorship follows necessarily from his appointment both as an officer of B and as a member of P's managing body; or

(c) the directorship is held jointly by B and P.

(3) For the purposes of section 13(9), a right to appoint (or remove) which is exercisable only with the consent or agreement of another person must be left out of account unless no other person has a right to appoint (or remove) in relation to that directorship.
(4) Nothing in this paragraph is to be read as restricting the effect of section 13(9)."
(4) In paragraph 9 (exercise of certain rights under instruction by, or in the interests of, incorporated friendly society) insert at the end "or in the interests of any body over which the society has joint control".
Consequential amendments
.—(1) Section 52 of the 1992 Act is amended as follows.

(2) In subsection (2), omit paragraph (d).

(3) In subsection (3), for "(4) below" substitute "(2)".

(4) For subsection (4) substitute—

"(4) A court may not make an order under subsection (5) unless it is satisfied that one or more of the conditions mentioned in subsection (2) are satisfied.
(5) In subsection (5), omit the words from "or, where" to the end.
References in other enactments
. References in any provision of, or made under, any enactment to subsidiaries of, or bodies jointly controlled by, an incorporated friendly society are to be read as including references to bodies which are such subsidiaries or bodies as a result of any provision of this Part of this Schedule.").
On Question, amendment agreed to.
Clause 342 [The record of authorised persons etc.]:
Lord Bachmoved Amendment No. 177A:
Page 181, line 37, after ("relates;") insert—
("( ) approved person;").
The noble Lord said: My Lords, on the fifth day in Committee the noble Lord, Lord Saatchi—I am sorry not to see him in his place; I believe that he will also be sorry not to be in his place—moved an amendment that required the authority to maintain a public record of certain details about approved persons under Part V. That amendment was defeated.
At the time I spoke against the amendment. Our main concern was that from the outset the authority might have difficulty in establishing the relevant part of the public record. The particular difficulty arises because of the grandfathering arrangements that are proposed for employees of authorised firms. Our intention is that, for the purposes of Part V of the Bill, people should automatically be treated, as having been approved for any controlled functions that they were performing when that part of the Bill is brought into force. The process will be automatic and we cannot be sure that the authority will have all the, information in time for the public record to go live on day one.
However, we agree that it would be desirable to remove uncertainty on the question of the coverage of the register, and we have now brought forward amendments which require certain information to be included. That is the minimum that must be included. The authority may add to that such other information as it sees fit. The authority proposes also to include information about the controlled functions for which the person has approval. We have not made that a requirement as we do not yet know how approvals will be classified by the authority. Therefore, we cannot express what they would insert in the register.
By bringing forward the amendments in this group and by paying the necessary compliment to the noble Lord, Lord Saatchi, I hope that it will be clear that the Government have taken careful note of the points made by the noble Lord in Committee. We shall

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endeavour, working with the authority, to bring the arrangements into force at the earliest moment. It shows that the Government listen. I beg to move.
Lord Kingsland: My Lords, this is indeed a rare moment to savour. The Government have thought again in the most constructive way. I should like to draw to the attention of the noble Lord, Lord Bach, that, if my memory serves me correctly, the noble Earl, Lord Home, also spoke most eloquently to that amendment and, indeed, I see that he is in his place. I believe that the House owes a great deal to his persuasive argument which led to the Government's change of mind.
12.15 a.m.
Lord Bach: My Lords, I am grateful to the noble Lord for reminding me of the noble Earl's contribution. I should pay him the same tribute as I paid to the noble Lord, Lord Saatchi.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendments Nos. 177B and 177C:
Page 182, line 23, at end insert—
("(g) in the case of a person who is an approved person—

(i) his name;

(ii) the name of the relevant authorised person;

(iii) if the approved person is performing a controlled function under an arrangement with a contractor of the relevant authorised person, the name of the contractor.").

Page 183, line 3, at end insert—
("(8) "Approved person" means a person in relation to whom the Authority has given its approval under section 58 and "controlled function" and "arrangement" have the same meaning as in that section.
(9) "Relevant authorised person" has the meaning given in section 65.").
On Question, amendments agreed to.
Clause 343 [Restrictions on disclosure of confidential information by Authority etc]:
Lord McIntosh of Haringeymoved Amendment No. 178:
Page 183, line 16, leave out from beginning to ("and") and insert ("any provision made by or under this Act;").
The noble Lord said: My Lords, in moving this amendment I should like to speak also to Amendments Nos. 179 to 183. These amendments are intended to address concerns about the width of the power in Clause 344 which the Delegated Powers and Deregulation Committee raised in its report on the Bill. The committee recommended that the Bill be amended to restrict that power in a way which clearly limits it to information needed for regulatory and other public functions. These amendments achieve that.
Amendments Nos. 178, 182 and 183 make technical drafting amendments to Clauses 343 and 344. I beg to move.
On Question, amendment agreed to.
Clause 344 [Exceptions from section 343]:
Lord McIntosh of Haringeymoved Amendments Nos. 179 to 183:
Page 184, line 6, after ("is") insert ("—
(a) made for the purpose of facilitating the carrying out of a public function; and
(b)")
Page 184, line 13, after ("prescribed") insert ("public").
Page 184, line 17, after ("prescribed") insert ("public").
Page 184, line 23, leave out sub-paragraphs (ii) and (iii).
Page 184, line 35, at end insert—
("(5) "Public functions" includes—

(a) functions conferred by or in accordance with any provision contained in any enactment or subordinate legislation;

(b) functions conferred by or in accordance with any provision contained in the Community Treaties or any Community instrument;

(c) similar functions conferred on persons by or under provisions having effect as part of the law of a country or territory outside the United Kingdom;

(d) functions exercisable in relation to prescribed disciplinary proceedings.

(6) "Enactment" includes—

(a) an Act of the Scottish Parliament;

(b) Northern Ireland legislation.

(7) "Subordinate legislation" has the meaning given in the Interpretation Act 1978 and also includes an instrument made under an Act of the Scottish Parliament or under Northern Ireland legislation.").
On Question, amendments agreed to.
Lord McIntosh of Haringeymoved Amendment No. 183VA:
After Clause 345, insert the following new clause—
COMPETITION INFORMATION
(".—(1) A person is guilty of an offence if he has competition information (whether or not it was obtained by him) and improperly discloses it—

(a) if it relates to the affairs of an individual, during that individual's lifetime;

(b) if it relates to any particular business of a body, while that business continues to be carried on.

(2) For the purposes of subsection (1) a disclosure is improper unless it is made—

(a) with the consent of the person from whom it was obtained and, if different—

(i) the individual to whose affairs the information relates, or

(ii) the person for the time being carrying on the business to which the information relates;

(b) to facilitate the performance by a person mentioned in the first column of the table set out in Part I of Schedule (Competition Information) of a function mentioned in the second column of that table;

(c) in pursuance of a Community obligation;

(d) for the purpose of criminal proceedings in any part of the United Kingdom;

(e) in connection with the investigation of any criminal offence triable in the United Kingdom or any part of the United Kingdom;

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(f) with a view to the institution of, or otherwise for the purposes of, civil proceedings brought under or in connection with—

(i) a competition provision; or

(ii) a specified enactment.

(3) A person guilty of an offence under this section is liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum;

(b) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both.

(4) Section 343 does not apply to competition information.
(5) "Competition information" means information which—

(a) relates to the affairs of a particular individual or body;

(b) is not otherwise in the public domain; and

(c) was obtained under or by virtue of a competition provision.

(6) "Competition provision" means any provision of—

(a) an order made under section (Competition scrutiny);

(b) Chapter III of Part X; or

(c) Chapter II of Part XVIII.

(7) "Specified enactment" means an enactment specified in Part II of Schedule (Competition Information).").
The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendment No. 226YA. These amendments are concerned with competition gateways. They form a new clause and a new schedule and they are the final chapter in the improvements we have made to the competition scrutiny regimes in the Bill. They address a concern raised in Committee in another place. They provide protection for confidential information obtained by the Director General of Fair Trading and the Competition Commission in carrying out their competition scrutiny responsibilities under the Bill.
They make it clear that such information must be kept confidential unless the persons concerned are content that it should be revealed or because it is necessary for the performance of one of a number of specific public purposes. Those purposes are set out in subsection (2) of the new clause and (.he new schedule. They are in line with the Competition Act 1998. I beg to move.
On Question, amendment agreed to.
Clause 377 [Restitution orders in cases of market abuse]:
Lord McIntosh of Haringeymoved Amendment No. 183WA:
Page 200, line 39, leave out from ("person"1 to end of line 40 and insert ("("the person concerned")—

(a) has engaged in market abuse, or

(b) by taking or refraining from taking any action has required or encouraged another person or persons to engage in behaviour which, if engaged in by the person concerned, would amount to market abuse,

and the condition mentioned in subsection (1A) is fulfilled,
(1A) The condition is—").
The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 183XA, 183YA, 183ZA, 183A, 183AA, 183AB, 183AC, 183AD, 183AE, 183AF, 183AG, 183AH,
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183AJ, 183C and 183D. I shall respond to Opposition Amendments Nos. 183WAA and 183ADA when they have been spoken to by them.
When we come to our amendments, the substantive change made by this group is to allow the FSA and the courts to order a person who requires or encourages another person to engage in market abuse to pay restitution. Clause 119(1)(b) already allows the FSA to impose a penalty or make a statement when someone does that. Of course, the FSA can impose a penalty only where it would have been market abuse if the person concerned had engaged in the behaviour themselves, rather than requiring or encouraging another to do so.
Amendments Nos. 183WA and 183AD ensure that restitution can be made in that situation. I do not believe that anyone can dispute the need for that.
The protections for reasonable belief and due diligence will also apply in that circumstance. The FSA and the courts will not be able to order restitution where the persons who required or encouraged behaviour had reasonable grounds for believing that their behaviour was not of that type, or exercised all due diligence and took all reasonable precautions to avoid behaving in that way.
Noble Lords opposite have tabled Amendments Nos. 183WAA and 18ADA which amend our amendments. We had sight of those only this morning. I would prefer that they speak to those amendments before I respond to them. I beg to move.
The Chairman of Committees: My Lords, Amendment No. 183WAA is on the supplementary sheet and it is an amendment to Amendment No. 183WA.
Lord Kingslandmoved, as an amendment to Amendment No. 183WA, Amendment No. 183WAA:
Line 4, in paragraph (b), after ("has") insert ("knowingly").
The noble Lord said: My Lords, Amendments Nos. 183WA to 183ZA give the court power, on an application by the authority, to award compensation—restitution—against someone who instigates market abuse: he "requires or encourages" the abuser.
The danger is that the court may treat the authorised person as encouraging the abuse because, without knowing about the abuse, it agrees to "approve" a client's communication for the purposes of Clause 19 without being able to discover whether it contains untrue or misleading statements.
The government amendment on restitution does not change the scope of the offence, but regrettably makes it more likely that the authority will want to hit the investment bank or stockbroker that unwittingly takes part in the market abuse. Typically, that will be where it approves, for the purposes of Section 57 of the Financial Services Act, a press release or takeover document at the request of the client. The firm is already required by FSA rules to ensure that the document is not misleading. That will be continued by

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the authority under the new regime. Neither the FSA nor the authority would bring an action against a firm if it had tried to find out the true position.
However, if the authority can now get restitution in those circumstances, so that innocent investors receive some compensation, I believe that the authority would try to do so. That is the background to our amendments. The authorised person has to know what he is doing in encouraging the commission of market abuse.
Your Lordships are well aware that the Financial Services and Markets Bill already empowers the authority to impose unlimited fines on innocent third parties who require or encourage another person to engage in market abuse. Typically, where a corporate finance firm approves for issue a takeover circular containing statements that it did not know were misleading, that phraseology is less draconian than the Government wanted initially and is a concession that the Government made at the urging of our shadow Treasury team. The authority is unlikely to impose a large fine on an innocent third party, but is much more likely to seek restitution in the circumstances of actual loss.
It is fair to say that the Opposition have so far failed to bring an intent element into the liability to require restitution. None the less, the Government have provided that the innocent third party should not have to pay compensation if he exercised all due diligence to avoid encouraging the abuse. However, he may not do enough for the defence to apply. Nevertheless, it would be unfair to require him to pay compensation if he did not know that what he had agreed to did in fact constitute market abuse.
The problem would disappear if, as we have urged, some element of intent was required before the market abuse of misleading the market was committed. Currently, the market abuser is guilty even if he did not know that he could be misinterpreted. The amendment proposes therefore that the accused should be guilty of committing or encouraging market abuse if intent can be presumed from the facts, which are then proved.
I believe that I am right in saying that Amendment No. 183 is—I hesitate to use the word "otiose" and will therefore use the expression "no longer necessary". Government Amendment No. 183YA brings in safe harbours for reasonable belief and due diligence. That is an initiative that we had requested. I can now withdraw the amendment and I thank the Government for their conduct. I beg to move.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord for introducing these two pairs of amendments. It may be better to consider them in that way. The first pair comprises Amendments Nos. 183A and 183B and the second pair is the two amendments to our amendments, Amendments Nos. 183WAA and 183ADA.
The noble Lord, Lord Kingsland, was quite right to observe that we have gone further than his Amendments Nos. 183A and 183B. His amendments
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would require the FSA and the courts, when deciding how much restitution a person who had engaged in market abuse should pay, to have regard to whether he had reasonable grounds for believing that his behaviour was not market abuse or whether he had taken all reasonable precautions and exercised due diligence. Having considered the issue carefully, we feel that the better approach is to provide that restitution cannot be ordered against a person in this position rather than just that "regard" should be had to these factors. Our amendments not only cover the points raised in Amendment No. 183A, but indeed go further than that. I am grateful for the noble Lord's recognition of that fact.
I cannot be so friendly about Amendments Nos. 183WAA or 183ADA which would only allow the FSA or the courts to order restitution where someone had "knowingly" required or encouraged another to engage in behaviour which would be construed as market abuse if he had done it himself. I do not know whether these amendments, which were tabled very late, were put down in response to the wholly inaccurate press comments on these matters over the weekend. I regret that the amendments raise the familiar issue of intent. If the noble Lord thinks that I shall accept them because the Opposition Treasury Front Bench in another place is moving backwards, I am afraid that I shall have to disabuse him.
"Knowingly" clearly adds little to "required" since the circumstances in which one person requires another to do something without being aware of what he is doing are likely to be rare. Nevertheless, it is conceivable that a person may negligently require another to engage in abusive behaviour in the same way as a person may negligently engage in abusive behaviour himself. The simple answer is to take care. That is why we have introduced protections for those who do so.
Knowledge is also, to a certain extent, often implicit in "encouraging". However, again in this case we do not want it to be a requirement of the regime for the FSA to have to prove someone's mental state. We have debated this matter again and again. I can do no better than to recall the example of my noble friend Lord Grabiner's much slandered six year-old son and the possibility of his arguing that he did not know that he was going to break the window at which he aimed a stone, or, in the case of "encouraging", that his giving the stone to another boy and pointing at the window did not amount to "knowingly encouraging".
"Encouraging" is not a new concept. What constitutes encouragement in a specific situation will ultimately be a matter for the courts. But it is something which those who advise the industry, when change was made to the regime in another place, signalled that they were content with. It was a change welcomed by the Opposition in another place, and indeed a change that went further than that suggested by the Opposition. Noble Lords also did not comment on this point when analogous provisions in Part VIII were debated.

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Of course, the FSA will be able to provide guidance on the market abuse regime in the code. Indeed, it is obliged to do so. And it is obliged to consult the public. If any further clarity is needed as to the situations in which someone may have action taken against them for encouraging market abuse, then this is the place for it.
We seem again to have "over-lawyering" creeping in, I am sorry to say. It is worth my reiterating that this regime is not designed to catch people out. We made that clear on many occasions. It is designed to protect markets and market users from abuse. What constitutes abuse depends on the expected standards of the market and in certain circumstances may include negligent behaviour; for example, not putting out information to the market which should be put out. That will depend on the market in question. We put in safeguards to protect those who have a reasonable belief or who take due diligence. The regime now strikes the right balance. Et is effective and fair. I commend the changes to the House and urge the noble Lord, Lord Kingsland, not to press his amendment to my amendment.
Lord Kingsland: My Lords, I shall read carefully in Hansard what the Minister said and will let him know now that I shall return to this matter at Third Reading. Meanwhile, I beg leave to withdraw the amendment.
Amendment No. 183WAA, as art amendment to Amendment No. 183WA, by leave, withdrawn.
On Question, Amendment No. 183WA agreed to.
12.30 a.m.
Lord McIntosh of Haringeymoved Amendments Nos. 183XA to 183ZA:
Page 200, line 41, leave out ("him") and insert ("the person concerned").
Page 200, line 43, at end insert—
("( ) But the court may not make an order under subsection (2) if it is satisfied that—

(a) the person concerned believed, on reasonable grounds, that his behaviour did not fall within paragraph (a) or (b) of subsection (1); or

(b) he took all reasonable precautions and exercised all due diligence to avoid behaving in a way which fell within paragraph (a) or (b) of subsection (1).").

Page 200, line 46, leave out ("(1)") and insert ("(1A)").
The noble Lord said: My Lords, with the leave of the House I shall move Amendments Nos. 183XA to 183ZA en bloc. I beg to move.
On Question, amendments agreed to.
[Amendment No. 183A not moved.]
Lord McIntosh of Haringeymoved Amendments Nos. 183AA to 183AC:
Page 201, line 13, leave out ("paragraph (a) of that subsection") and insert ("subsection (1A)(a)").
Page 201, line 15, leave out ("paragraph (b) of that subsection") and insert ("subsection (1A)(b)").
Page 201, line 28, leave out ("(1)") and insert ("(1A)").
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The noble Lord said: My Lords, with the leave of the House I shall move Amendments Nos. 183AA to 183AC en bloc. I beg to move.
On Question, amendments agreed to.
Clause 378 [Power of Authority to require restitution]:
Lord McIntosh of Haringeymoved Amendment No. 183AD:
Page 201, line 41, leave out ("and") and insert (", or
(b) by taking or refraining from taking any action has required or encouraged another person or persons to engage in behaviour which, if engaged in by the person concerned, would amount to market abuse.
and the condition mentioned in subsection (2A) is fulfilled,
(2A) The condition is—").
The noble Lord said: My Lords, I beg to move.
[Amendment No. 183 ADA, as an amendment to Amendment No. 183AD, not moved.]
On Question, Amendment No. 183AD agreed to.
Lord McIntosh of Haringeymoved Amendments Nos. 183AE to 183AJ:
Page 201, line 42, leave out ("him") and insert ("the person concerned").
Page 201, line 44, at end insert—
("( ) But the Authority may not exercise that power as a result of subsection (2) if, having considered any representations made to it in response to a warning notice, there are reasonable grounds for it to be satisfied that—

(a) the person concerned believed, on reasonable grounds, that his behaviour did not fall within paragraph (a) or (b) of that subsection: or

(b) he took all reasonable precautions and exercised all due diligence to avoid behaving in a way which fell within paragraph (a) or (b) of that subsection.").

Page 202, line 6, leave out ("(2)") and insert ("(2A)").
Page 202, line 8. leave out ("(2)") and insert ("(2A)").
Page 202, line 10, leave out ("(2)") and insert ("(2A)").
The noble Lord said: My Lords, with the leave of the House I shall move Amendments Nos. 183AE to 183AJ en bloc. I beg to move.
On Question, amendments agreed to.
[Amendment No. 183B not moved.]
Lord McIntosh of Haringeymoved Amendments Nos. 183C and 183D:
Page 202, line 16, leave out ("(2)") and insert ("(2A)").
Page 202, line 18, leave out ("(2)") and insert ("(2A)").
The noble Lord said: My Lords, with the leave Of the House I shall move Amendments Nos. 183C and I 83D en bloc. I beg to move.
On Question, amendments agreed to.
Clause 381 [Notice for payment]:
Lord McIntosh of Haringeymoved Amendment No. 184:
Leave out Clause 381.
On Question, amendment agreed to.
Clause 383 [Decision notices]:
Lord Bachmoved Amendment No. 185:

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Page 203, line 35, leave out paragraph (b).
The noble Lord said: My Lords, these amendments represent 12 government amendments; namely, Amendments Nos. 185, 186, 187, 188, 195, 196, 197, 198, 199, 200, 201, and 212A. There are four opposition amendments; namely, Amendments Nos. 188A, 199A, 199B and 199C. I am happy to say that as regards the last amendment the Government accept it and they are grateful to the Opposition for having spotted the point.
Perhaps I may move the government amendments briefly and then invite the Opposition to speak to theirs. The Government's amendments in this group complete the rationalisation of the authority's decision-making procedures under the Bill. They are not very substantial, making a number of necessary further adjustments to Part XXVI mainly to reflect the other amendments we have considered at Report stage.
Clause 383 deals with decision notices. Amendment No. 185 deletes subsection 1(b) which is the requirement for a decision notice to specify the date on which the decision takes effect following the rationalisation. That is otiose because only supervisory notices will be capable of specifying a date on which the decision takes effect. Amendment No. 186 deletes subsection (3) for the same reason.
Clause 384 requires a notice of discontinuance to be issued when the FSA decides not to proceed with action proposed in a warning notice or for which a decision notice has been issued. Amendments Nos. 187 and 188 make minor drafting improvements to Clause 384 to make clear that that also applies where the refusal of an application which has been dropped was not a complete refusal of the original application. The previous text appeared only to apply to a complete refusal.
Clause 387 determines which decisions attract the third party's rights under Clause 388 to receive copies of warning and decision notices, to make representations, refer matters to the tribunal and the rights of access to material under Clause 389. These are the kinds of decisions which we have loosely described as disciplinary-type decisions. As we made clear in Committee, we propose to apply these provisions to certain types of supervisory-type decisions; namely, those which involve the final cancellation of authorisation, approval or recognition.
Amendments Nos. 195 and 197, therefore, add to references to warning and decision notices issued under the second new clause after Clause 51, which deal with the cancellation of a Part 1V permission. Similarly, Amendments Nos. 196 and 198 add references to warning and decision notices issued under Clause 66, which concern the exercise of the FSA's disciplinary powers under Part V of the Bill or the power of the competent authority for listing under Clause 87 to cancel a person's approval to act as sponsor for listing. Again, the Government consider it appropriate to apply Clauses 388 and 389 to these decisions.
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Amendment No. 199 is a minor drafting change correcting a punctuation omission. Amendment No. 200 adds various references to clauses which involve supervisory notices to Clause 390. Amendment No. 201 alters some of the existing paragraph references in order to refer quickly to those places where the term "supervisory notice" applies. Amendment No. 212A is a consequential amendment. Clause 400 deals with the consequences of a Treasury direction made under Clause 398 in order to implement a third country decision. That is a decision taken by the European Council or the European Commission to restrict market access to persons from certain non-EEA countries on the grounds that reciprocal market access to persons from the EEA is not available in those countries.
Subsection (1) of Clause 400 disapplies the normal warning and decision notice procedure where refusal of an application for permission is given in accordance with such direction. The amendment simply updates the references to the procedural provision in line with Amendments Nos. 107 to 112.
If it is convenient to the House I invite the Opposition to speak to their amendments.
Lord Kingsland: My Lords, the Opposition has four amendments in this group but, as the Minister has kindly said, our Amendment No. 199C has been accepted by the Government for which we are duly grateful.
I shall deal with Amendments Nos. 199A and 199B and then go on to deal with Amendment No. 188A. That may seem numerically illogical but politically my contribution will accordingly rise to a crescendo.
As far as concerns Amendments Nos. 199A and 199B, a major preoccupation for firms that are at present subject to disciplinary proceedings is that the regulator is at a considerable advantage, first, because it possesses a full file of evidence relating to the firm's alleged offence which the firm may not have; and, secondly, because the regulator also possesses full information about its other disciplinary cases which enables it to make a comparison between the seriousness of the offence of the firm in question and other firms' offences. As disciplinary cases are nearly always held in private, this information is never made generally available.
Those two disadvantages are magnified in the case of disciplinary action being taken against an individual, who will not necessarily have access to his own firm's information relating to the circumstances of the alleged offence. Clause 389 gives a statutory right of access to material upon which the authority has relied; and what is now defined as "secondary material", which is other material that the authority has considered and which might undermine that decision.
However, there are significant carve-outs in subsections (2) to (7). One of those exclusions is of particular concern; namely, where the material was taken into account by the authority for the purpose of comparison with other cases. The present regulators

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are under a duty to exercise their disciplinary powers in a consistent fashion. It is virtually impossible for a firm to prove whether or not it is observing this requirement if it does not have access to other comparable material. Therefore, it is essential that this kind of information is revealed. There is no requirement for full case papers or the names of other firms to be revealed. All that is necessary is for the authority to produce a schedule of the other cases and their key characteristics.
Before I turn to Amendment No. 188A, I should like to make two short observations on Clause 390. I hesitate to continue because I am not certain whether these have been covered completely by Amendment No 199C. Perhaps the Minister could assist me in this respect.
Lord Bach: My Lords, as I understand it, the amendments that touch on Clause 390 are one Opposition amendment, Amendment No. 199C, which we have accepted, and two government amendments, namely Amendments Nos. 200 and 201. I dealt with the latter shortly, but I did deal with them. Amendment No. 200 adds various references to clauses which involve supervisory notices under Clause 390. It is a consequential amendment on the addition of the new clause after Clauses 51 and 77. Amendment No. 201 alters some of the existing paragraph references in order to refer correctly to those places where the term "supervisory notice" applies. Those are the only amendments which relate to Clause 390.
Lord Kingsland: My Lords, I am much obliged to the Minister. I think this follows logically from what he said, but perhaps the noble Lord could just confirm that the tribunal's ability to take into account a failure by the authority to follow its procedure under Clause 390(12) applies when a supervisory notice is given, as well as when a warning or decision notice is issued. I think it follows, from what the Minister said, that he agrees with that approach. If he confirms that, I need not say anything more about Amendment No. 199C. I see that he confirms that. I am much obliged.
I turn to Amendment No. 188A. The Minister will be well aware of what lies behind Amendment No. 188A. It is the firm belief of the Opposition that the procedure followed in the underlying clause breaches the European Convention on Human Rights. I expect that the Minister is, at least in part, familiar with the argument that I am about to deploy. However, just in case he is not, I draw his attention again to the case of Fayed v. the United Kingdom. The Minister will recall that one of the issues in this case was whether the DTI inspectors, who were looking into the takeover of Harrods, had to comply with the ECHR.
The Fayeds argued that the making, and subsequent publication of, the inspectors' report damaged their reputation and, thereby, their civil rights to honour and reputation. The European Commission of Human Rights was, however, of the opinion that Article 6(1) of the convention was not applicable to the proceedings conducted by the inspectors because those
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proceedings did not determine any civil right or obligation. The same view was subsequently adopted by the court, which stated that it was,
"satisfied that the functions performed by the Inspectors were in practice as well as in theory essentially investigative … The Inspectors did not adjudicate, either in form or in substance [and] did not make a legal determination as to criminal or civil liability … The purpose of their enquiry was to ascertain and record facts which might subsequently be used as a basis for action by other competent authorities.
In Fayed v. the United Kingdom, the role of the inspectors was indeed limited to investigating the facts. But the role of the authority under the Bill in relation to this clause is completely different. The authority does not only investigate the facts, but also imposes a fine—albeit subject to a later independent tribunal hearing. It is quite clear that the authority reaches a view as to whether the accused is or is not guilty; and the accused obviously would argue that he is not. If the accused does not make the effort to appeal to the tribunal and incur the costs of an appeal, there will be an adjudication on a dispute by the prosecutor rather than by an "independent and impartial tribunal". This is, in our view, impermissible under the convention. A prosecuting authority can prosecute but cannot impose a penalty.
I make it clear, of course, that we are not suggesting that the authority cannot reach a settlement with an accused. If the accused is willing to settle, there is no need for a determination of his civil rights and obligations. The informal procedure which the authority wants to bring in, that already exists in the SROs, can therefore continue, but not the other set of circumstances which we believe is incompatible with the convention. I hope that the Minister, on due and mature reflection, will come to the same conclusion.
12.45 p.m.
Lord Bach: My Lords, I shall speak to the Opposition amendments in the order in which the noble Lord, Lord Kingsland, spoke to them. Amendments Nos. 199A and 199B concern access to authority material. They both concern material to which the authority is not required to give access. Subsections (2) and (3) of Clause 389 enable the authority to withhold material in a number of circumstances, including where the material is subject to legal privilege; where it is only being considered by the authority with a view to maintaining consistency of approach between different cases; where providing access would not be in the public interest; and, lastly, where access would be unfair given the likely significance of the materials of the current case weighed against the potential prejudice to the commercial interest of another person.
Amendment No. 199B would require the authority to provide a written summary of any such evidence and to allow access to the material for the tribunal. We believe that this goes too far.
Subsections (4) and (5) require notice to be given of the fact that material is being withheld on grounds that it is subject to privilege, or because the authority has taken the view that access would be unfair or against

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the public interest. Where such a view has been reached, subsection (5) also requires these reasons to be included in the notice. This will enable the person who is subject to the notice to consider whether he should refer the matter to the tribunal.
In this respect, may I make it clear to the noble Lord that Clause 389 deals only with the material to which the authority is or is not required to provide access at the warning notice/decision notice stages. Nothing in Clause 389 constrains the rights of the tribunal to consider relevant evidence. Our amendments to Part IX of the Bill have been drafted to put this beyond all doubt. If the matter is referred, it will be for the independent tribunal to consider whether the material should be disclosed. That will be covered by the tribunal's procedural rules.
Turning to Amendment No. 199A, subsection (2) of Clause 389 ensures that the authority is able to consider how similar or comparable cases have been dealt with in order to ensure proper consistency in its proposed actions and penalties, without thus opening up sensitive commercial details about other businesses to scrutiny by the subject of the action currently proposed. As my noble friend Lord McIntosh said in Committee:
"If action is being taken against a person X, it is no business of X's whether or not similar action was previously taken against another person, Y".—[Official Report, 30/3/00; col. 1032.]
Indeed, disclosure might well be unfair, particularly if the action in the earlier case had not been pursued.
Nor were we attracted to the idea of requiring the authority to provide summaries with the identities of the persons in the comparative cases removed. This is administratively burdensome and might not always be effective in protecting the legitimate commercial interests of the persons involved in those cases.
I appreciate that Amendment No. 199A does not seek to impose a requirement on the FSA but simply says that subsection (2) of Clause 389 does not prevent the FSA from providing a summary of the principal characteristics of those cases. Let me assure the noble Lord, if I can—as my noble friend attempted to do in Committee —that, as currently drafted, subsection (2) does not prevent this.
Let me repeat another assurance given in Committee: there will be considerable material in the public domain to assist our character X, the subject of a notice, in assessing whether the action proposed is in line with general authority policy and practice. Apart from the statement of the policy on financial penalties, which we have discussed already, there will be considerable detail on already determined cases.
I have already said how grateful we are to the noble Lord for tabling Amendment No. 199C. When it comes to the vote on that amendment, we shall vote with him to accept it.
I turn now to Amendment No. 188A, which the noble Lord considered to be the high point of his speech. The amendment requires that if the person concerned does not opt to refer the matter to the tribunal the authority would be obliged to do so or to
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drop the action proposed. Effectively, it would require all decisions to be referred to the tribunal. This is entirely unacceptable. We have explained on a number of occasions that we do not think it is necessary or desirable to involve the tribunal in all decisions as a matter of course. That would be burdensome not only for the authorised community but also for the authority.
We have deliberately structured the procedures to make reference to the tribunal a right, to be exercised at the discretion of person against whom the authority is taking action or in respect of whom the authority is taking a decision. Importantly, this approach has been considered and endorsed by the Joint Committee chaired by the noble Lord, Lord Burns, and, we believe, was also recognised by the industry as being in its own interests. Requiring all decisions to be considered by the tribunal would be too costly for all concerned—the FSA, the industry and the taxpayer, who, of course, funds the tribunal.
I understand from the noble Lord's remarks that his concern is that providing for a decision to take effect without adjudication by the independent and impartial tribunal if the matter is not referred might conflict with the requirements of the ECHR. There has been correspondence on this matter following the noble Lord's remarks in Committee concerning the Fayed judgment. The Government have never sought to argue that disciplinary action under the Bill does not potentially involved a determination of a person's civil rights and obligations. However, it is not a necessary consequence of that that disciplinary action can be taken only if the case has been argued in front of a tribunal. Article 6.1 of the convention—we shall soon all know it by heart—says:
"In the determination of his civil rights and obligations of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law".
There can be no question that the Bill confers the necessary entitlement to such a hearing. It allows all those against whom the FSA proposes to take disciplinary action to refer the matter to the independent tribunal to be established under the Bill. Where there has been a breach of rules, the authority simply comes to a decision as to what disciplinary action it believes should be taken in all the circumstances of the particular case. In reaching that conclusion, the authority does not determine anyone's civil rights or obligations through the process. It takes an administrative, not a judicial, decision. Once that conclusion has been reached, the person is entitled to refer the matter to the tribunal. The FSA's decision has no effect—I underline that—where a person chooses to exercise his right to have the matter referred to the tribunal. Where the person concerned does exercise his right, then it is the tribunal which determines the person's civil rights and obligations. If a person chooses not to refer the matter to the tribunal, the FSA can proceed to take a final decision. Of course, in such a case the person affected by that decision will have chosen freely not to exercise the entitlement which the convention requires should be afforded to him.

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In sum, therefore, we believe that the Bill does provide the appropriate convention safeguards. It is not necessary to provide for all decisions to be taken by the tribunal; nor, for the reasons which I have attempted to give, is it desirable to provide for that. Therefore, in spite of the eloquent way in which the noble Lord put his case, we do not believe that the provision goes against the ECHR. I invite the noble Lord to consider what has been said. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendment No. 186:
Page 204, line 8, leave out subsection (3).
On Question, amendment agreed to.
Clause 384 [Notice of discontinuance]:
Lord McIntosh of Haringeymoved Amendments Nos. 187 and 188:
Page 204, line 26, leave out from ("if") to ("of") in line 27 and insert ("the discontinuance of the proceedings concerned results in the granting").
Page 204, line 27, at end insert ("warning or decision").
On Question, amendments agreed to.
Clause 385 [Final notice]:
Lord Kingslandhad given notice of his intention to move Amendment No. 188A:
Page 204, line 33, leave out from ("130(1)") to end of line 35 and insert ("by the person concerned, the Authority must either itself refer the matter or give the person concerned a notice of discontinuance in relation to it.").
The noble Lord said: My Lords, I am most grateful to the Minister for giving such a full reply in response to Amendment No. 188A. I shall read very carefully what he said before deciding whether to pursue this matter at Third Reading. The weak point of his argument concerns a situation in which an individual chooses not to pursue his rights in the tribunal. In these circumstances, he will suffer a penalty which has been determined by the authority. I entirely understand that the noble Lord's answer will be, "Ah, but that situation was chosen by the individual's free will". It is in relation to whether he is right about the effect of that that any future argument on the matter will take place.
I shall not move the amendment.
[Amendment No. 188A not moved.]
The Chairman of Committees: My Lords, in putting the following amendments, I should point out to your Lordships that there is a mistake in the Marshalled List as printed. In line 3 of Amendment No. 191, the word "section" should be "subsection".
1 a.m.
Lord McIntosh of Haringeymoved Amendments Nos. 189 to 191:
Page 205, line 11, at end insert—
("(5A) A final notice about a requirement to make a payment or distribution in accordance with section 378(3) must state—

(a) the persons to whom,

(b) the manner in which, and

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(c) the period within which.

it must be made.").
Page 205, line 15, after ("(5)(b)") insert ("or (5A )(c)").
Page 205, line 19, at end insert—
("( ) If all or any of a required payment or distribution has not been made at the end of a period stated in a final notice under section (5A)(c), the obligation to make the payment is enforceable, on the application of the Authority, by injunction or, in Scotland, by an order under section 45 of the Court of Session Act 1988.").
On Question, amendments agreed to.
Clause 386 [Publication]:
Lord McIntosh of Haringeymoved Amendments Nos. 192 to 194:
Page 205, line 33, at end insert․
("( ) When a supervisory notice takes effect, the Authority must publish such information about the matter to which the notice relates as it considers appropriate.").
Page 205, line 38, at end insert—
("(6A) For the purposes of determining when a supervisory notice takes effect, a matter to which the notice relates is open to review if—

(a) the period during which any person may refer the matter to the Tribunal is still running;

(b) the matter has been referred to the Tribunal but has not been dealt with:

(c) the matter has been referred to the Tribunal and dealt with but the period during which an appeal may be brought against the Tribunal's decision is still running; or

(d) such an appeal has been brought but has not been determined.").

Page 205, line 39, at end insert—
("( ) "Supervisory notice" has the same meaning as in sect ion 390.").
On Question, amendments agreed to.
Clause 387 [Application of sections 388 and 389]:
Lord McIntosh of Haringeymoved Amendments Nos. 195 to 198:
Page 206, line 3, after ("section") insert ("(Cancellation of Part IV permission: procedure)(1).").
Page 206, line 4, after ("66(1),") insert ("87(4)(b),").
Page 206, line 7, after ("section") insert ("(Cancellation of Part IV permission: procedure)(2),").
Page 206, line 8, after ("66(4),") insert ("87(6)(b),").
On Question, amendments agreed to.
Clause 388 [Third party rights]:
Lord McIntosh of Haringeymoved Amendment No. 199:
Page 206, line 38, at end insert ("or").
On Question, amendment agreed to.
Clause 389 [Access to Authority material]:
[Amendments Nos. 199A and 199B not moved.]
Clause 390 [The Authority's procedures]:
Lord Kingslandmoved Amendment No. 199C:
Page 209, line 5, after ("giving") insert ("a supervisory notice or").

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The noble Lord said: I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendments Nos. 200 and 201:
Page 209, line 15, at end insert—
("() (Exercise of own-initiative power to vary Part IV permission: procedure)(4), (7) or (8)(b);
() (Discontinuance or suspension: procedure)(2) or (5);
() 193(3), (6) or (7)(b);").
Page 209, line 17, leave out paragraphs (b) and (c) and insert—
("() 264(3), (7)(a) or (9)(a) (as a result of subsection (8)(b));
() 278(3), (6) or (7)(b);").
On Question, amendments agreed to.
Clause 392 [Misleading statements and practices]:
Lord McIntosh of Haringeymoved Amendment No. 202:
Page 210, line 27, at end insert—
("( ) In proceedings for an offence under subsection (2) brought against a person to whom subsection (1) applies as a result of paragraph (a) of that subsection, it is a defence for him to show that the statement was made in conformity with price stabilising rules or control of information rules.").
The noble Lord said: My Lords, in moving this amendment, I should like to speak also to Amendments Nos. 203 to 206. The first two amendments in the group, Amendments Nos. 202 and 203, arise from the introduction of the new clause concerning control of information rules and fulfil a commitment to provide a defence from the offence of misleading statements and practices for behaviour in conformity with such rules. Such a defence currently exists in the Financial Services Act 1986. The amendments also ensure that there is a defence for behaviour in conformity with price stabilisation rules for both the offences in Clause 392.
The other amendments in the group make drafting changes, correcting the way in which Clause 392 relates to Schedule 2 dealing with regulated activities. I beg to move.
Lord Kingsland: My Lords, I do not seek to question the objective of the amendment, which relates to the market manipulation offence and the intention of which is entirely helpful. Perhaps I may make a point about the drafting.
A misleading statement, promise or forecast is exempted from the offence if it is made in conformity with control of information rules; but that would seem to apply only where the person making it is aware of the information and is allowed or required not to mention it.
With respect, I do not think it proper to provide an exemption for this, because it involves—does it not?—a deliberate lie. It would be much better if the individual concerned did not say anything. But what is perhaps more likely in practice is that the person who makes the statement, promise or forecast is the company acting through an individual who is not aware of the true position because he is on the wrong side of the Chinese wall. That ought to be covered as
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well, or perhaps instead. In this case, an exemption should apply where the person makes the statement, promise or forecast without knowing that it is misleading, false or deceptive because the relevant information is withheld from him in compliance with the control of information rules. In addition, the company should not be treated as knowingly or recklessly making such a statement if the individual who makes the statement, promise or forecast is not aware of the relevant information and is not told to make it by somebody who is. I am aware that I have not canvassed this matter with the Minister. He may well wish to reflect on what I have said and return to it at Third Reading.
Lord McIntosh of Haringey: My Lords, I shall seek to avoid that. The control of information rules are, as I believe the noble Lord, Lord Kingsland, is aware, the Chinese wall rules. Subsections (1) and (2) of Clause 392 make it an offence knowingly or recklessly to make misleading statements in order to induce someone to enter into an investment agreement, or if the person is reckless as to whether it will induce someone to do it. Subsection (3) goes on to provide that it is an offence for a person to act in a way which creates a false or misleading impression if it is done for the purpose of creating that impression and thereby induces someone to enter into an investment agreement.
Subsection (4) provides certain defences. Amendments Nos. 202 and 203 are intended to fill a number of gaps in the coverage of these defences. At the moment subsection (4) provides that a person is not guilty of an offence under subsection (3) if he takes action in conformity with price stabilisation rules made by the FSA under Clause 141. That is repeated in Amendment No. 202. However, that amendment extends the provision to cover not only actions but also statements and thus also provides a defence to the offence created by subsections (1) and (2).
Amendment No. 202 also creates a new defence to the offence created by subsections (1) and (2). This follows the introduction of an amendment which enables the FSA to make control of information rules; in other words, Chinese wall rules. Accordingly, it will be a defence for a person to show that he acted in conformity with the control of information rules; that is to say, that he operated so-called "Chinese wall" rules. It would be a defence for him to say that he was on the wrong side of the Chinese wall and could not, therefore, be expected to act in the way that he would have done had he been on the other side of it.
Lord Kingsland: My Lords, I am most grateful to the Minister for that helpful explanation.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendments Nos. 203 to 206:
Page 210, line 35, at end insert ("; or
(c) that he acted or engaged in the conduct in conformity with control of information rules").
Page 211, line 14, after ("2") insert ("(except paragraphs 25 and 26)").

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Page 211, line 14, leave out ("subsection (9)") and insert ("subsections (8) and (9)").
Page 211, line 15, leave out ("that subsection") and insert ("each of those subsections").
Page 211, line 17, after ("subsection") insert ("(8) or").
On Question, amendments agreed to.
Clause 395 [Offences by bodies corporate etc.]:
Lord McIntosh of Haringeymoved Amendment No. 207:
Page 212, line 5, leave out subsection (3).
The noble Lord said: My Lords, in moving Amendment No. 207, I should like to speak also to Amendments Nos. 208 to 211. When we debated this clause in Committee, the noble Lord, Lord Kingsland, drew attention to a possible ambiguity in the wording. As he pointed out, it was not clear whether in referring to offences committed by partnerships in England or Scotland what was being referred to was the jurisdiction in which the offence was committed or the jurisdiction in which the partnership was formed. I said that the Government were aware of that and would address it in due course. We have managed to do so as part of an improvement to the clause to achieve fairness.
The purpose of the clause is to enable persons in positions of managerial responsibility within businesses to be prosecuted alongside the business itself if that business has committed an offence which they have connived at or consented to, or which is the result of the neglect of their duties. That must be right. At the moment, company directors and officers, and members of partnerships constituted under the law of Scotland, are treated differently from members of partnerships constituted under the law of England and Wales or the law of Northern Ireland. While directors and Scottish partners commit an offence only if they are actively involved in the wrongdoing, or let it arise through their own neglect, English, Welsh and Northern Irish partners are effectively deemed to have been involved in any offence under the Bill committed by their partnership, unless they cart show that they did not know it was being committed or that they took reasonable steps to prevent it.
We have reviewed the matter and believe that the position is unfair. Amendments Nos. 207 and 208 make it clear that all partners are to be treated in the same way as company directors and officers. In doing this, the amendments remove any need to refer in the clause to the nationality of individual partners because all partnerships are now covered by the provisions of subsection (4). They also, coincidentally, rectify the ambiguity identified by the noble Lord, Lord Kingsland, earlier.
Amendments Nos. 209, 210 and 211 are intended to ensure that this clause covers not only corporate bodies and partnerships but also unincorporated associations, and they substantially reproduce the equivalent provisions in the Financial Services Act 1986. I beg to move.
Lord Kingsland: My Lords, I am most grateful to the noble Lord the Minister for at least reflecting on one of the things we said in relation to this clause.
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On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendments Nos. 208 to 210 inclusive:
Page 212, line 10, leave out ("in Scotland").
Page 212, line 23, at end insert—
("() If an offence under this Act committed by an unincorporated association (other than a partnership) is shown—

(a) to have been committed with the consent or connivance of an officer of the association or a member of its governing body, or

(b) to be attributable to any neglect on the part of such an officer or member,

that officer or member as well as the association is guilty of the offence and liable to be proceeded against and punished accordingly.").
Page 212, line 26, after ("unincorporated") insert ("association").
The noble Lord said: My Lords, I beg to move these amendments en bloc.
On Question, amendments agreed to.
Lord McIntosh of Haringeymoved Amendment No. 211:
After Clause 397, insert the following new clause—
JURISDICTION AND PROCEDURE IN RESPECT OF OFFENCES
(" .—(1) A fine imposed on an unincorporated association on its conviction of an offence is to be paid out of the funds of the association.
(2) Proceedings for an offence alleged to have been committed by an unincorporated association must be brought in the mime of the association (and not in that of any of its members).
(3) Rules of court relating to the service of documents are to have effect as if the association were a body corporate.
(4) In proceedings for an offence brought against an unincorporated association—

(a) section 33 of the Criminal Justice Act 1925 and Schedule 3 to the Magistrates' Courts Act 1980 (procedure) apply as they do in relation to a body corporate:

(b) section 70 of the Criminal Procedure (Scotland) Act 1995 (procedure) applies as if the association were a body corporate;

(c) section 18 of the Criminal Justice (Northern Ireland) Act 1945 and Schedule 4 to the Magistrates' Courts Northern Ireland) Order 1981 (procedure) apply as they do in relation to a body corporate.

(5) Summary proceedings for an offence may be taken—

(a) against a body corporate or unincorporated association at any place at which it has a place of business;

(b) against an individual at any place where he is for the time being.

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(6) Subsection (5) does not affect any jurisdiction exercisable apart from this section.
(7) "Offence" means an offence under this Act.").
The noble Lord said: My Lords, I beg to move this amendment formally.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendment No. 212:
Before Clause 398, insert the following new clause—
SCHEMES FOR REVIEWING PAST BUSINESS
(" .—(1) Subsection (2) applies if the Treasury are satisfied that there is evidence suggesting—

(a) that there has been a widespread or regular failure on the part of authorised persons to comply with rules relating to a particular kind of activity; and

(b) that, as a result, private persons have suffered (or will suffer) loss in respect of which authorised persons are (or will be) liable to make payments ("compensation payments").

(2) The Treasury may by order ("a scheme order") authorise the Authority to establish and operate a scheme for—

(a) determining the nature and extent of the failure;

(b) establishing the liability of authorised persons to make compensation payments; and

(c) determining the amounts payable by way of compensation payments.

(3) An authorised scheme must be made so as to comply with specified requirements.
(4) A scheme order may be made only if—

(a) the Authority has given the Treasury a report about the alleged failure and asked them to make a scheme order;

(b) the report contains details of the scheme which the Authority propose to make; and

(c) the Treasury are satisfied that the proposed scheme is an appropriate way of dealing with the failure.

(5) A scheme order may provide for specified provisions of or made under this Act to apply in relation to any provision of, or determination made under, the resulting authorised scheme subject to such modifications (if any) as may be specified.
(6) For the purposes of this Act, failure on the part of an authorised person to comply with any provision of an authorised scheme is to be treated (subject to any provision made by the scheme order concerned) as a failure on his part to comply with rules.
(7) This section applies whenever the failure in question occurred.
(8) "Authorised scheme" means a scheme authorised by a scheme order.
(9) "Private person" has such meaning as may be prescribed.
(10) "Specified" means specified in a scheme order.").
The noble Lord said: My Lords, I referred to this amendment and to Amendment No. 222, which is grouped with it, much earlier in our debates on this Bill. Amendment 212 allows the Treasury, by order, to authorise the FSA to establish and operate a scheme requiring firms to review their past business and, where appropriate, make restitution where retail customers have suffered loss.
This is an important power, as illustrated by the cases of mis-selling which have come to light in recent years, particularly cases of personal pensions, under which the value of redress offered and accepted
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already amounts to over £3 billion. In this sort of case experience has shown that it is expedient to require all firms which have conducted a certain class of business to check their past business, even though the regulator cannot know that every one of those firms will turn out to have failed to comply with the rules. However, this is not a power we envisage being used regularly.
The amendment reflects a commitment given in Committee by the Economic Secretary to the Treasury. It also, I believe, meets the concerns raised by my noble friend Lady Turner when tabling her Amendment No. 167 in Committee. At that time I promised my noble friend a Government amendment to Part X but we have looked at it again and it does not really fit in there. It does not sit comfortably with the Part XXV restitution powers. The nature of the exercise carried out in the unusual circumstances in which a review will be required is such that it involves a combination of mapping out the matters that fall to be dealt with under the scheme, detailed provisions to determine how the scheme will operate and the making of payments in an appropriate case.
So we have created a specific power for the creation of schemes under secondary legislation. The Treasury will, by order under the Bill, authorise the FSA to establish and operate the scheme: it will be set up under the order. The Delegated Powers and Deregulation Committee have considered our approach and raised no concern.
Amendment No. 222 specifies that the Treasury orders under this clause must be made by affirmative resolution of both Houses of Parliament. This will ensure that any such arrangements must be subject to debate. This will be informed by the report and other details that must be provided before the Treasury can make an order under the power. I beg to move.
On Question, amendment agreed to.
Clause 400 [Consequences of a direction under section 398]:
Lord McIntosh of Haringeymoved Amendment No. 212A:
Page 214, line 22, leave out ("section 51 does") and insert ("subsections (7) to (9) of section 50 do").
On Question, amendment agreed to.
Clause 405 [Gaming contracts]:
Lord McIntosh of Haringeymoved Amendment No. 213:
Page 218, line 9, leave out ("any contract") and insert ("a contract if").
The noble Lord said: My Lords, with Amendment No. 213, I should like to speak also to Amendments Nos. 214 and 215. These amendments make changes to Clause 405 in line with a commitment that we made in Committee in another place to look again at the clause and ensure that it is capable of giving the same protection for the enforceability of certain contracts, which might otherwise be subject to the statutory and common law rules relating to gaming provided for under the existing legislation.

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These regulations are important—at least they are for some people—although they are technical amendments. The clause as it stands is too narrow, because under subsection (2)(b) it expressly applies only to regulated activities. Therefore, it would not apply to a contract entered into in the course of any activity benefiting from the exclusion of the scope of regulated activities under the Bill. This contrasts with the Financial Services Act 1986 which states that contracts entered into in the course of an activity which benefits from an exclusion set out in Part III or IV of Schedule 1 to that Act do benefit from the exemption set out in the Act.
At the same time subsection (2) of Clause 405 does not work in its current form. It refers to regulated activities falling within paragraph 2 of Schedule 2, whereas in fact no activities as such fall within Schedule 2, given that Schedule 2 simply provides an indicative list of the sort of things about which orders under Clause 20 may be made rather than sets out which activities will be regulated under the Bill.
Amendments Nos. 213 to 215 introduce a new Treasury order-making power which will be used to specify which contract-based activities will be covered by the statutory exemption from unenforceability replacing the reference to regulated activities in subsection (2)(b). I beg to move.
On Question, amendment agreed to.
1.15 a.m.
Lord McIntosh of Haringeymoved Amendments Nos. 214 and 215:
Page 218, line 10, at beginning insert ("it is").
Page 218, line 11, leave out paragraph (b) and insert—
("(b) the entering into or performance of it by either party constitutes an activity of a specified kind or one which falls within a specified class of activity; and
(c) it relates to an investment of a specified kind or one which falls within a specified class of investment.
(3) Part II of Schedule 2 applies for the purposes of subsection (2)(c), with the references to section 20 being read as references to that subsection.
(4) Nothing in Part II of Schedule 2, as applied by subsection (3), limits the power conferred by subsection (2)(c).
(5) "Investment" includes any asset, right or interest.
(6) "Specified" means specified in an order made by the Treasury.").
On Question, amendments agreed to.
Lord McIntosh of Haringeymoved Amendment No. 216:
After Clause 406, insert the following new clause—
("Service of notices
SERVICE OF NOTICES
.—(1) The Treasury may by regulations make provision with respect to the procedure to be followed, or rules to be applied, when a provision of or made under this Act requires a notice or other document to be given.
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(2) The regulations may, in particular, make provision—

(a) as to the manner in which a document must be given;

(b) as to the address to which a document must be sent;

(c) requiring, or allowing, a document to be sent electronically;

(d) for treating a document as having been given, or as having been received, on a date or at a time determined in accordance with the regulations;

(e) as to what must, or may, be done if the person to whom a document is required to be given is not an individual;

(f) as to what must, or may, be done if the intended recipient of a document is outside the United Kingdom.

(3) Subsection (1) applies however the obligation to gibe a document is expressed (and so, in particular, includes a provision which requires a document to be served or sent).
(4) Section 7 of the Interpretation Act 1978 (service of notice by post) has effect in relation to provisions made by or under this Act subject to any provision made by regulations under t his section.").
The noble Lord said: My Lords, this new clause enables the Treasury, by order, to specify the way in which notices given to or by the authority (or other relevant persons) are to be taken to have been given. On the face of it, it may appear a minor point but precision would be important if, for example, a person had a specified number of days in which to do something from the date on which the notice was deemed to have been given or there was a question as to whether the notice was served on an appropriate person.
Such matters could be extremely important if the possibility of referring a matter to the tribunal depended on when the notice was deemed to have been given. Clearly it is also important that a notice should be given to an appropriate person in the firm, often the company secretary but certainly not the cleaner.
Section 204 of the Financial Services Act makes specific provision about service of notices. The Government considered making similar provision in the Bill. However, the Section 204 provision would not adequately deal with the range of matters that would need to be covered given the much wider scope of the Bill.
A further concern is that the provisions of Section 204 of the 1986 Act envisage service of notice in hard copy. Since that provision came into force, the use of the fax machine has become commonplace and acceptable for many types of formal communication but is not provided for under the 1986 Act. Clearly the development of new forms of transrnission—mobile short messaging, electronic mail and other Internet-based communications systems—means that the extended use of electronic communications is inevitable. The Government would not wish to prevent the financial services industry from benefiting from the use of those technologies in its dealings with the regulator. For example, to keep regulatory burdens low, the authority is currently exploring an Internet-based system to enable firms to apply for approvals under Clause 58 of the Bill for their prospective employees.
This new clause is a routine procedural measure which forms an important part of the overall package of measures to ensure that the authority acts appropriately when it carries out its regulatory functions. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendment No. 216A:
After Clause 406, insert the following new clause—
("Jurisdiction
JURISDICTION IN CIVIL PROCEEDINGS
.—(1) Proceedings arising out of any act or omission (or proposed act or omission) of—

(a) the Authority,

(b) the competent authority for the purposes of Part VI,

(c) the scheme manager, or

(d) the scheme operator,

in the discharge or purported discharge of any of its functions under this Act may be brought before the High Court or the Court of Session.
(2) The jurisdiction conferred by subsection (1) is in addition to any other jurisdiction exercisable by those courts.").
The noble Lord said: My Lords, with Amendment No. 216A I should like to speak also to Amendment No. 226ZA. These amendments effectively transpose the arrangements under Section 188 of the Financial Services Act 1986 so as to enable a person to seek judicial review of the authority, the competent authority under Part VI, the compensation scheme manager or the ombudsman scheme manager before an appropriate court in any part of the United Kingdom.
This is necessary because under the Civil Jurisdiction and Judgements Act 1982 a case against a company registered under the Companies Acts would normally need to be brought in the jurisdiction in which the company has its registered office. The companies to which these provisions relate are all registered in England and Wales. So without this provision a person would not otherwise be able to bring a case for judicial review before the Court of Session or the High Court in Northern Ireland. I beg to move.
On Question, amendment agreed to.
Clause 407 [Definitions]:
Lord McIntosh of Haringeymoved Amendments Nos. 217 and 218:
Page 219, line 16, at end insert ("(except in provisions relating to the Competition Commission)").
Page 219, line 17, at end insert—
(""control of information rules" has the meaning given in section (Control of information)(1):").
On Question, amendments agreed to.
[Amendment No. 218A not moved.]:
Lord McIntosh of Haringeymoved Amendment No. 219:
Page 220, line 3, leave out ("233(2)") and insert ("232").
On Question, amendment agreed to.
Clause 412 [Controller]:
[Amendments Nos. 219A to 219F not moved.]
[Amendment No. 220 had been withdrawn from the Marshalled List.]
Lord Bachmoved Amendment No. 220A:
After Clause 416, insert the following new clause—
TRANSITIONAL PROVISIONS
(".—(1) Subsections (2) and (3) apply to an order under section 416 which makes transitional provisions or savings.
(2) The order may, in particular—

(a) if it makes provision about the authorisation and permission of persons who before commencement were entitled to carry on any activities, also include provision for such persons not to be treated as having any authorisation or permission (whether on an application to the Authority or otherwise);

(b) make provision enabling the Authority to require persons of such descriptions as it may direct to reapply for permissions having effect by virtue of the order:

(c) make provision for the continuation as rules of such provisions (including primary and subordinate legislation) as may be designated in accordance with the order by the Authority, including provision for the modification by the Authority of provisions designated;

(d) make provision about the effect of requirements imposed, liabilities incurred and any other things done before commencement, including provision for and about investigations, penalties and the taking or continuing of any other action in respect of contraventions;

(e) make provision for the continuation of disciplinary and other proceedings begun before commencement, including provision about the decisions available to bodies before which such proceedings take place and the effect of their decisions;

(f) make provision as regards the Authority's obligation to maintain a record under section 342 as respects persons in relation to whom provision is made by the order.

(3) The order may—

(a) confer functions on the Treasury, the Secretary of State, the Authority, the scheme manager, the scheme operator, members of the panel established under paragraph 4 of Schedule 17, the Competition Commission or the Director General of Fair Trading:

(b) confer jurisdiction on the Tribunal;

(c) provide for fees to be charged in connection with the carrying out of functions conferred under the order;

(d) modify, exclude or apply (with or without modifications) any primary or subordinate legislation (including any provision of or made under, this Act).

(4) In subsection (2) "commencement" means the commencement of such provisions of this Act as may be specified by the order.").
The noble Lord said: My Lords, Amendments Nos. 220A and 226 deal with transitional arrangements for bringing the Bill into force. It is of course our intention to ensure that the transition to the new regime is as smooth as possible and causes the minimum disruption to firms and, indeed, to the regulators who we do not wish to be distracted from doing their core work.
We believe that it is sensible to make transitional provisions in an order as provided for under the new clause. Part of the reason is that we are moving from nine existing regulators—not counting the recognised professional bodies or Lloyd's—each with their own regulatory frameworks under six principal Acts of Parliament.
While our approach is very simple in policy terms, the precise arrangements will be very complex and very detailed. It would add substantially to the length of the Bill to include these provisions. More importantly, we wish to be able to publish the secondary legislation in draft before it is made so that those affected by it, and especially the industry, will be able to consider the arrangements and comment if they see any difficulty with the detail of the proposals. I believe that there has been widespread support for the Government's approach.
I turn to Amendment No. 226. In Committee, the Government moved amendments which introduced arrangements to enable the FSA to work with the self-regulating organisations under the Financial Services Act 1986 to bring about their demise. I can remind your Lordships that the amendments have the effect of removing the risk of challenge as the independence of the SROs diminishes in the months to come.
Amendment No. 226 is consequential to those changes. It ensures that those transitional arrangements for the SROs come into force on the passing of the Act rather than on a day to be appointed. The current statutory framework under the 1986 Act has caused some problems for the FSA as it has sought to restructure the various regulators that are merging together. Understandably, the FSA now wishes to press on with its preparations. I beg to move.
On Question, amendment agreed to.
Clause 417 [Regulations and orders]:
Lord Bachmoved Amendment No. 220B:
Page 225, line 35, leave out from ("make") to ("is") in line 36 and insert ("an order which is conferred on the Treasury by this Act and any power to make regulations which is conferred by this Act").
The noble Lord said: My Lords, I shall first introduce the Government's amendment which simply tidies up a few loose ends. There is an Opposition amendment in the group which will no doubt be spoken to.
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The Bill confers a number of powers to make orders. Some refer to administrative functions of the authority. For example the FSA may make a prohibition order under Clause 55 in relation to an individual who it considers unfit to perform certain functions. The court may also make orders for particular purposes. It may, for example, make orders under Clause 194(3) in relation to injunctions against incoming insurance companies from other EEA member states.
While I am sure it will be clear to most people that such orders—as opposed to orders made by the Treasury—are exercisable by statutory instrument, that is not the effect of Clause 417(1) as currently drafted. The Government's amendment makes it clear that those order-making powers conferred on the Treasury are exercisable by statutory instrument. However, court orders will be made in the usual way. FSA orders will be made in accordance with the relevant procedural requirements under the Bill.
The same issue does not arise in the case of regulations as all powers to make regulation under the Bill are to be exercisable by statutory instrument, whether they are exercised by the Treasury or other Ministers of the Crown. I beg to move.
Lord Newby: My Lords, I wish to speak to Amendment No. 221. This amendment is self-explanatory. It requires simply that, where the Treasury plans to introduce regulations or orders, it makes proper provision for those regulations or orders to be considered in draft by all those who might have an interest in them. It also makes provision for representations to be duly considered and for the Treasury to respond to the representations before the regulations or orders are considered by Parliament.
The reason for proposing the amendment is extremely straightforward. Much secondary legislation will come forward under this Bill. As we have seen in this House on a number of occasions during this Session, the role of Parliament in scrutinising secondary legislation is in reality extremely limited. The point at which secondary legislation can be given careful scrutiny is before it is laid before Parliament. This amendment enables that to be required of the Treasury as a matter of course.
When the Minister moved Amendment No. 220A, I was very interested to hear him say that the Government would be issuing draft orders or, perhaps, regulations and looking for comments. This amendment seeks merely to make that a requirement rather than an optional extra.
Lord Saatchi: My Lords, I speak briefly in support of the amendment of which we are co-authors. As the noble Lord, Lord Newby, said, one of the points made at an earlier stage of the Bill was that, despite its enormous length, it is in many ways a skeleton

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Bill—I believe that that was the phrase used—for the reason that he gave; that is, so much is submerged and yet to come in the form of codes, guidance, manuals, regulations or orders.
We believe that this amendment is important because it would require the Treasury to consult on regulations to be made under the Act. In fact, I believe that the Treasury usually does consult, but there is no obligation to do so. Just as important, there is no obligation to make any public response to consultation.
In relation to consultation on this Bill and on the draft orders that have been published, we gather that some of those involved with the Treasury have described it as a "black hole"; in other words, as an entity which absorbs a tremendous amount of comment and suggestion but where the response is not visible to the naked eye. I am sure that the Minister will say shortly that he does not wish to be too prescriptive about the Treasury's role. However, I hope that he will understand that our concern arises because so many important regulations to be made under the Bill have yet to appear.
Therefore, a proper consultation exercise, as proposed by the noble Lord, Lord Newby, with a requirement for a public response should be made in relation to all these future regulations. We can see no reason in principle why the Treasury should not be obliged to consult. It would be a valuable discipline to do so. It would mean, as the noble Lord, Lord Newby, said, that secondary legislation that comes before Parliament would have the added benefit of being considered by Parliament following a proper public consultation. It would be extraordinary if the Government found it difficult to accept this most reasonable amendment.
Lord Bach: My Lords, I must confess to having feelings of some dismay to see this amendment on the Marshalled List. It concerns a matter that we have debated at least twice. I suppose that there is no harm in debating it a third time. The last time that we did so was in the context of an amendment tabled by the noble and learned Lord, Lord Fraser of Carmyllie, on the second day of Report.
This amendment would require the Treasury to consult on all orders and regulations proposed under the Bill. As I attempted to explain a few minutes ago, it will not always be the Treasury that will make regulations and orders under the Bill. Other departments will have responsibility for making certain regulations. Some powers to do things by order will be exercised by the authority itself or by the court, although, of course, such orders are not orders in the sense of secondary legislation.
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But the amendment does not make that distinction, so it is defective in that it requires all such consultations to be conducted by the Treasury. We believe that the Treasury already has a good record. It has regularly consulted on proposals generally in the financial services field in recent years and specifically on Bill-related matters. It has already been consulting on the draft secondary legislation it proposes to make under the Bill.
We have had formal public consultations on a number of draft Statutory Instruments and more informal discussions with industry representatives on some other drafts; for example, amendments to building and friendly societies legislation.
We have also had discussions on the underlying policy in order to inform the drafting process and we consulted on a draft of the Bill, although noble Lords may be forgiven for forgetting that, given the time that has passed since then.
The Treasury proposes to continue to consult where that is helpful. We have even given specific commitments to do so in certain cases. It is, of course, well established Cabinet Office procedure that departments should seek to consult as they consider most appropriate and produce regulatory impact assessments before making any legislation that imposed burdens. The Treasury will always ensure that it complies with relevant guidance of the kind I have just mentioned.
This Bill imposes statutory consultation requirements on the authority. That is right for the authority, given its legal status. But the Treasury is rather different from the authority. The Government are directly accountable to both Houses of Parliament and Parliament rightly scrutinises and questions what the Government do. The Bill does not change that.
So the reality is that if the Treasury should fail to follow the procedures set out in those Cabinet Office guidelines, it will be open to Parliament to question that. It is of course the case that amendments to the best practice promoted by the Cabinet Office will flow through to the exercise of the powers under the Bill. The amendment before us would seem to cast matters in stone.
Finally, we need to look at the amendment in a wider context. There is nothing special about the powers under the Bill for the Treasury or Ministers to make orders and regulations. They are normal arrangements and we have applied the standard procedures.
I remind noble Lords that the Treasury has submitted a number of memoranda to our own Delegated Powers and Deregulation Committee explaining the delegated legislative powers under the Bill. The Government have responded positively to recommendations made by the committee when it considered the consultation draft of the Bill. After the Bill was brought to this House from another place, the Government have accepted every recommendation made by the committee.

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I repeat that departments are expected to follow Cabinet Office guidelines, just as they are required to respect parliamentary procedure. There is nothing special about the powers in the Bill. There are a lot of them because it is a big Bill covering a wide subject area and they are also related to matters which are largely technical.
We maintain that this Government have reinforced the procedures for consultation and regulatory appraisal compared with the system that we inherited. If noble Lords opposite believe that those arrangements are still inadequate, that rather begs the question what they must have thought about the rather more lax procedures which the previous government applied. That is perhaps a matter which is best pursued in another context. Indeed, if there are inadequacies in the Cabinet Office guidelines, it would be useful if those issues were raised so that those views could be taken into account when the guidelines are next reviewed.
The logic of the amendment is that all departments should be under a duty to consult on all secondary legislation all the time. We believe that that is unnecessary and, we would argue, positively undesirable. Government departments should consult where it is appropriate for them to do so and it is the responsibility of Parliament to ensure that they do.
I hope that the noble Lord, Lord Newby, will take some comfort from my remarks and will be satisfied to some degree by the assurances that I have given him.
Lord Newby: My Lords, I am not sure that I can take much comfort from what the Minister has said. When he started he made an extremely valid point about certain orders under this Bill not being secondary legislation and that, therefore, there was a defect in the drafting, of which I can see the strength. I thought he would suggest coming forward with an amendment that rectified that defect, given that he started off by being so positive about publishing draft regulations and orders that are secondary legislation.
In relation to the phrase "the Treasury would normally consult", as a general rule departments consult when it is helpful or appropriate to do so. That begs the question: to whom it is helpful and to whom it is appropriate? I am not happy simply to accept that the Treasury, when it believes that it is helpful and appropriate to do so, will publish draft orders. However, I accept that the drafting may be defective. Therefore, I shall look at this and I may return to the matter next week.
On Question, amendment agreed to.
[Amendment No. 221 not moved.]
Clause 418 [Parliamentary control of statutory instruments]:
Lord McIntosh of Haringeymoved Amendments Nos. 222 to 225:
Page 226, line 3, after ("232(5)") insert (", (Schemes for reviewing past business)").
Page 226, line 19, at end insert—
("() it varies a previous order made under section 19(5) so as to make section 19(1) apply in circumstances in which it did not, as a result of that previous order, apply;").
Page 226, line 21, after ("19(9)") insert ("or (9A)").
Page 226, line 23, at end insert ("; or
() it adds one or more investments to those which are controlled investments for the purposes of section 19").
On Question, amendments agreed to.
Clause 420 [Commencement]:
Lord McIntosh of Haringeymoved Amendments Nos. 226 and 226YA:
Page 227, line 1, leave out subsection (1) and insert—
("(1) The following provisions come into force on the passing of this Act—

(a) this section;

(b) sections 417, 419 and 422;

(c) paragraphs 1 and 2 of Schedule 20.").

Before Schedule 19, insert the following new schedule—
("SCHEDULE
COMPETITION INFORMATION
PART I
PERSONS AND FUNCTIONS FOR THE PURPOSES OF SECTION (Competition information)
1. The Table set out after this paragraph has effect for the purposes of section (Competition information)(3)(b).

TABLE

PERSON

FUNCTION

1. The Commission.

Any function of the Commission under Community law relating to competition.

2. The Comptroller and Auditor General.

Any function of his.

3. A Minister of the Crown.

Any function of his under a specified enactment.

4. Director General of Telecommunications.

Any function of his under a specified enactment.

5. Director General of Gas Supply

Any function of his under a specified enactment

6. The Director General of Gas for Northern Ireland.

Any function of his under a specified enactment.

7. The Director General of Electricity Supply.

Any function of his under a specified enactment.

8. The Director General of Electricity Supply for Northern Ireland.

Any function of his under a specified enactment.

9. The Director General of Water Services.

Any function of his under a specified enactment.

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10. The Civil Aviation Authority.

Any function of that authority under a specified enactment.

11. The Rail Regulator.

Any function of his under a specified enactment.

12. The Director General of Fair Trading.

Any function of his under a specified enactment.

13. The Competition Commission.

Any function of the Competition Commission under a specified enactment.

14. The Authority.

Any function of the Authority under a specified enactment.

15. A person of a description specified in an order made by the Treasury.

Any function of his which is specified in the order.

PART II
THE ENACTMENTS

1. The Fair Trading Act 1973

2. The Consumer Credit Act 1974

3. The Estate Agents Act 1979

4. The Competition Act 1980

5. The Telecommunications Act 1984

6. The Airports Act 1986

7. The Gas Act 1986

8. The Control of Misleading Advertisements Regulations 1988

9. The Electricity Act 1989

10. The Broadcasting Act 1990

11. The Water Industry Act 1991

12. The Electricity (Northern Ireland) Order 1992

13. The Railways Act 1993

14. Part IV of the Airports (Northern Ireland) Order 1994

15. The Gas (Northern Ireland) Order 1996

16. The EC Competition (Articles 88 and 89) Enforcement Regulations 1996

17. The Unfair Terms in Consumer Contracts Regulations 1999

18. This Act.

19. An enactment specified for the purposes of this paragraph in an order made by the Treasury.").

On Question, amendments agreed to.
Schedule 19 [Minor—and—Consequential Amendments]:
Lord McIntosh of Haringeymoved Amendment No. 226ZA:
Page 279, line 10, at end insert—
("The Civil Jurisdiction and Judgments Act 1982 (c. 27)
In paragraph 10 of Schedule 5 to the Civil Jurisdiction and Judgments Act 1982 (proceedings excluded from the operation of Schedule 4 to that Act), for "section 188 of the Financial Services Act 1986" substitute "section (Jurisdiction in civil proceedings) of the Financial Services and Markets Act 2000".").
On Question, amendment agreed to.
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Schedule 21 [Repeals]:
Lord Hunt of Wirralmoved Amendment No. 226A:
Page 282, line 12, at end insert—

("1923 c. 8.

The Industrial Assurance Act 1923.

The whole Act.

1948 c. 39.

The Industrial Assurance and Friendly Societies Act 1948.")

The whole Act.

The noble Lord said: My Lords, it must be a special privilege to have the honour of opening the final debate on the third day of the Report stage of the Financial Services and Markets Bill at just after 25 minutes to two. I thank the Government most warmly for giving me this opportunity. On several occasions in the other place assurances were given about the repeal of the industrial assurance Acts. I have been carefully watching the Order Paper over the past few weeks, but sadly no government amendments to the necessary effect have yet been tabled.
I do not expect to speak for more than 45 minutes! However, to be clear about this matter, the industrial assurance Acts of 1923 and 1948 once provided consumers with a necessary degree of protection for those buying low premium life assurance policies where premiums are paid in cash to company agents visiting someone's home. Those days are now over and save for one small area that I shall cover, those Acts are now an encumbrance and not a protection. The Acts, for example, forbid the conversion of the collection of premiums by standing order or direct debit and that severely damages the value that policyholders ultimately receive.
However, for existing policyholders the Acts provide certain protection where the assurance contract confers a right to the policyholder that has a monetary value. One example is the written notices that have to be sent to policyholders before a policy can be terminated. I acknowledge that that protection will have to be re-enacted in a suitable form, either in the FSA's rules or in a statutory instrument. In the meantime, I cannot see any reason why those Acts should not be included to be repealed when the Bill becomes an Act. I beg to move.
Lord Bach: My Lords, at this hour I can hardly do anything other than respond positively to the amendment of the noble Lord. It would be churlish to do otherwise. I can respond by assuring him of the Government's continued commitment to the repeal of the industrial assurance Acts. The Acts impose restrictions on the conduct of home services assurance businesses that are necessary, particularly given the nature of the powers to be conferred on the authority more generally by the Bill.

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The constraints under the existing statutory framework are driving providers out of the market. That, in turn, means that those who are most likely to benefit from the kinds of services provided by home services are being denied access to valuable products to help them to save and provide for their futures.
In other debates we have explained that the Government are committed to taking practical steps to help disadvantaged consumers and repeal of much of this legislation is one such measure that we shall adopt. The amendment before the House may not be adequate because it will be necessary to make certain savings to the industrial assurance Acts for existing policies. That will be necessary because those Acts confer certain rights on policyholders and must be protected. However, I can tell the noble Lord that the Government will bring forward an amendment at Third Reading that will include provisions to ensure that the Acts cease to have effect while enabling any necessary savings to be made.
Lord Hunt of Wirral: My Lords, even at this late hour, I must say to the Minister how warmly I appreciate his generous words. I fully accept what he
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has said and I look forward to seeing the amendment when it is brought forward at Third Reading next week. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringeymoved Amendments Nos. 227 and 228:
Page 283, line 2, column 3, at beginning insert—

("In section 13, subsections (2) to (5), (8) and (11).")

Page 283, line 2, column 3, at end insert—

("In section 52, subsection (2)(d) and, in subsection (5), the words from "or where" to the end.

Schedule 7.

In Schedule 8, paragraph 3(2).")

The noble Lord said: My Lords, these amendments were spoken to with Amendment No. 176. I beg to move.
On Question, amendments agreed to.
House adjourned at eighteen minutes before two o'clock.

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